The cost of hiring a professional accountant to do your taxes varies based on your situation and what tax forms you are required to file. The average cost of hiring a certified public accountant (CPA) to prepare and submit a Form 1040 and state return with no itemized deductions is $176, while the average fee for an itemized Form 1040 and a state tax return is $273. If you are self-employed and need to hire a CPA to prepare an itemized Form 1040 with a Schedule C and a state tax return, the average fee increases to $457. It is important to keep in mind that these are the average fees; the cost will differ if parts of the tax filings are under special cases and take longer for the accountant to complete. In these circumstances, accountants charge more due to consultation fees and overtime work.

Key Takeaways

  • The average cost of hiring a tax professional ranges from $146 to $457.
  • 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 $130.
  • While filing your taxes independently without the help of a professional can save you money, it can be very time-consuming; the IRS estimates that individuals will need to spend approximately 11 hours preparing their returns in 2020.

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 $130. Both TurboTax or H&R Block offer reasonably priced options for tax accounting software. Using tax accounting software can be like having a virtual accountant there to guide you through the process.

Although doing your taxes independently using tax software can save you money versus hiring a professional, there are many benefits of working with a CPA. Accountants prepare tax returns with much more sophisticated software, compared to the software sold to consumers. These programs can scan financial information quickly and organize data accurately, thus reducing any possible errors. For 2020 returns, the Internal Revenue Service (IRS) estimates that individuals will need to spend approximately 11 hours preparing their returns, which is not an insignificant amount of time.

When you pay a professional to do your taxes, you are getting the added benefit of numerous other services, including accounting, record-keeping, tax consultation, and auditing. You can also hire an accountant who has a particular specialization, for example, if you own a small business or live abroad. Some professionals are generalists, but no matter what, it is important to hire someone with a level of experience.

Accountants can provide assistance in building up an effective accounting system to accurately and conveniently assess profitability, monitor prices, and expenses, control budgets, and forecast future speculation trends. Accountants can also consult with their clients on tax-related problems, such as tax compliance and regulations and methods of tax reduction. Moreover, accountants can come up with accurate audit reports, financial statements, and other accounting documentation required by government regulation and lending institutions. At the end of the day, hiring an accountant can be the start of a fruitful relationship with a financial consultant. They will learn about your family or business's financial records and goals, and they can give valuable advice and personal tax reduction suggestions and answers to critical questions at any time of the year.

Your decision about whether or not to hire a professional or file your own taxes with the help of accounting software should be based on how comfortable you are with numbers, your familiarity with basic tax rules, and how much time you are willing to spend. When the Tax Cuts and Jobs Act (TCJA) went into effect on January 1, 2018, it made some sweeping changes to the tax code. In particular, there were quite a few changes made to itemized deductions. This has made filing taxes more complicated, even for those familiar with the tax code.

If you fall within a certain income bracket or are a senior citizen, you may qualify for tax filing assistance. As of 2020, the Volunteer Income Tax Assistance (VITA) provides free tax preparation services to people who earn $56,000 or less per year. In addition, if you are age 60 or older, you may qualify for free tax preparation services through Tax Counseling for the Elderly (TCE) and the AARP Foundation's Tax-Aide programs.