While services offer free DIY tax preparation, even the best internet researchers will hit dead ends when trying to navigate filing taxes on their own. Getting confused is easy between the changing laws, countless deductions, and different forms. That’s why there are accountants who, for a price, will do the work for you. But sometimes, they can be an expensive alternative that’s not easy to commit to.
Having an accountant prepare your taxes is the peace of mind that your taxes will be prepared properly. With that in mind, here’s a breakdown of how much it costs to have an accountant prepare your taxes and some alternatives.
Is hiring a CPA worth it?
If your taxes are complicated, you don't have the patience or expertise to prepare your taxes, or you're unsure about how specific tax laws or changes related to your circumstances, hiring a qualified CPA is worth it. A competent CPA should be able to examine your particular tax position and figure out ways to save you money on your taxes.
How do you find a good CPA?
Word of mouth was the traditional method to find a CPA to file your taxes. Often friends and family have someone they know who could prepare your taxes. But, accounting firms may have different rates, and you still may want peace of mind knowing that the accountant you’re handing your financial information to will do the best possible job.
Technology now allows us to identify tax professionals based on our individual tax needs. For example, at Taxfyle, we have thousands of verified CPAs and EAs across the country, each uniquely qualified in getting the most out of your tax return. They average 12 years of experience and can file your tax returns on-demand.
Cost of hiring an accountant
The average price for preparing and submitting a Form 1040 and state tax return with no itemized deductions is $220, while the average price for an itemized Form 1040 and state tax return is $323. The typical cost for a CPA to complete an itemized Form 1040 with a Schedule C and a state tax return form for a self-employed person is $457.
It’s essential to remember that this is the average fee based on what firms reported in the past. Each person’s tax return is unique, and for that reason, the prices may change. If your return is overly complicated, the fees may increase or decrease.
Should small business owners use an accountant?
A tax preparer specializing in this area of tax preparation is typically beneficial to small businesses. Tax professionals can lead to significant savings financially and with time while also ensuring that you follow all applicable tax requirements for business owners. Given that you have your hands full running your business, handing over your taxes and bookkeeping to an accountant could free up opportunities to grow your business. At the same time, you maintain the peace of mind that your small business’ finances are taken care of.
Are there alternatives?
Yes, there are alternatives to hiring a CPA or accountant to file your taxes. Purchasing tax accounting software can be a less expensive option; it can be free (for simple returns), and for more complex filing options, it will generally cost less than $120.
While preparing your taxes yourself with tax software might save you money compared to hiring a professional, there are several advantages to hiring a CPA. Accountants use more sophisticated software than what is provided to the general public for preparing tax returns. It’s important to keep in mind that CPAs keep up with the latest tax laws; something the IRS changes annually.
These systems can scan financial data and precisely arrange data, lowering the risk of mistakes. According to the IRS, individuals will need to spend around 12 hours completing their returns in 2021.
Another alternative is services like Taxfyle. Like DIY software, we offer an affordable option for filing taxes. However, unlike DIY software, we match you with a Tax Professional who is experienced in filing your returns at a reasonable price. We make tax filing easy by connecting you with an expert who can take the effort of filing your taxes off your hands.
Bottom line
You have several options available to you. There’s always the brick-and-mortar route of driving to an accounting firm and meeting an accountant to file your taxes face-to-face. Then again, you could do the work yourself to save a few extra bucks. However, the alternative to finding a Tax Pro on-demand remains as the most cost- and time-effective solution.
