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How Much Should You Be Paying Your Tax Preparer?

There are a variety of ways in which tax professionals set their prices for preparing their clients taxes, and no two will charge the same amount. However, one general rule of thumb is that the more complex the financial situation, the higher the price will be.

Here are a few more guidelines to help you better understand how much you should be paying your tax preparer:

Pricing methods used by tax pro’s:

Here are a few of the methods used by tax professionals to determine a price for their work:

  • They may have a set fee for each tax form or schedule

  • Their price may be based upon last years fee, depending upon whether the tax situation has remained the same, or altered

  • A minimum tax return fee, with an extra fee dependent upon the complexity of the financial circumstances

  • Fees based upon the subjective value of the tax preparation service provided

  • A simple, hourly rate

  • A fee that is set for each item of data entry

What are the average fees for tax preparation?

If you itemize your deductions on your tax return, then experts advise that you could expect to pay an average sum of $273. While this may seem high, it does include state and federal returns and if you don’t itemize, then the figure falls to around $176.

If you’re not organized and arrive at the tax preparers office with plastic bags full of receipts, or are missing any important documents, then you can expect to pay more for your lack of effort. 

What is included in the tax preparation fee?

Not all tax professionals will price their work in the same way, so be sure to ask yours what is included in their price, such as whether they are charging more for electronic filing, phone calls or office visits.

You will also need to find out what will happen if a mistake is made that is the fault of your preparer, and what will be included in your initial fee if their mistakes cause you to be audited.

The best way to negotiate a reasonable fee:

Sticking with the initial quote from one tax preparer will never give you an idea of whether the work is being priced fairly, or whether it is priced worryingly low. Get several quotes from tax preparers to have a better understanding of what you should be paying and remember that the lowest price may not always be as good as it sounds and may not include everything that you need from them. Added extras can soon mount up, so once you’ve received an initial quote that seems fair, talk to them directly about the chance of the fee increasing for any reason.

Remember that the price you pay for a tax preparer is almost always a sound investment, particularly as it can save you from having to pay costly penalties further down the line if you prepare your own taxes without having the relevant knowledge and experience.