Tax Preparation Cost - The Ultimate Guide 2021


Instead of wasting your weekends doing your taxes this year, you may wish to hire a professional. Although it could save you a lot of time, you probably are most concerned with the tax preparation cost and tax preparation fees in 2021. This article will answer the questions: how much does it cost to have your taxes done, and how much should I pay my tax preparer?
We will examine the answers to these questions so you can make the right decision when hiring a tax professional.

Also read: What Is FUTA Tax - All You Need To Know

Advantages Of Hiring A Tax Professional

Besides saving you precious time, there are numerous reasons to hire a tax professional. These may include the following:

  1. It can save you money since tax preparers can find deductions or tax credits that you may have missed.
  2. The tax code is complicated and often changes, so every year may be just as challenging as the last. Read this article to find out more about tax planning insights from 2020.
  3. Professionals can answer your questions and resolve tricky issues.
  4. You will have peace of mind knowing that your taxes are filed correctly.
  5. If you make an error, it can end up costing you a lot of money and time.
  6. Tax professionals can help you make smart decisions all year round to save money on your taxes.
  7. Your tax professional could amend your past returns if you missed any deductions.
  8. You will reduce your risk during the tax audit.
  9. It takes the hassle out of doing your taxes.

How Much Does It Cost To Have Your Taxes Done?

Now that you know the benefits of having a professional do your taxes, you're probably wondering how much does it cost to have your taxes done. To give you an estimate, the national average in 2018-2019 for a non-itemized 1040 form with a state return was $188. However, this is just the national average. The tax preparer cost depends on several additional factors.

Also read: Are Home Improvements Tax Deductible?


The average tax preparer will obviously charge less than a high-quality advisor. The professional you pick will depend on your needs and the level of attention your situation requires. These are the credentials you may see when searching for a professional.

  • Enrolled agents are licensed by the IRS after passing a special examination
  • Certified public accountants must pass the Uniform CPA Examination and have studied accounting at a college or university
  • Tax attorneys have earned a degree in law and passed a bar exam

If your taxes are pretty straightforward, you may wish to have an enrolled agent or CPA handle your taxes. However, if you need someone with unlimited rights to represent you before the IRS, you should hire a tax attorney.

Your Organization

If you show up at the office with a bunch of crumpled receipts and a pile of unorganized documents, you are going to pay a higher fee. If you plan on having someone do your taxes, you'll need to gather up and organize your records. You should collect W-2 forms, 1099 forms, mortgages and bank statements, charitable contributions, and other relevant financial documents.
If you keep everything organized, it will save your tax preparer time, thus allowing him or her to charge fewer fees.

Where You Reside

The fees charged by tax professionals vary in each state. In the South, you will pay significantly less than in the New England area. These are the average tax preparation cost for an itemized 1040 form with Schedule A and a state return in each region.

  • East South Central (Alabama, Kentucky, Mississippi, Tennessee): $210
  • West North Central (Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota): $214
  • East North Central (Illinois, Michigan, Indiana, Ohio, Wisconsin) – $249
  • Mountain (Arizona, Colorado, Montana, Nevada, Idaho, New Mexico, Utah, Wyoming) – $263
  • South Atlantic (Delaware, Washington DC, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia, West Virginia) – $268
  • West South Central (Arkansas, Louisiana, Oklahoma, Texas) – $271
  • Middle Atlantic (New Jersey, New York, Pennsylvania) – $290
  • Pacific (Alaska, California, Hawaii, Oregon, Washington) – $329
  • New England (Connecticut, Massachusetts, Maine, Vermont, New Hampshire, Rhode Island): $333

Even if you live in a region in which the average is relatively low, you should expect fluctuations.

How Complicated Your Taxes Are

If your tax professional has to fill out several supplemental forms and schedules on top of your 1040, your taxes just got a lot more complicated. That means that the price will go up. Also, you can typically expect to pay more if you have a higher than average income. So how much does it cost to have your taxes done? Well, that depends on your financial situation and the factors above.
The best way to find out your tax preparation fees in 2021 is by consulting with a professional.

How Much Should I Pay My Tax Preparer?

If you are wondering: "How much should I pay my tax preparer?" this section is for you. There are various ways to calculate tax preparation fees in 2021. Of course, you wouldn't want to be surprised when you get the bill from your tax advisor, so when you sit down with them, make sure to ask how they will charge you. Typically, tax professionals use one of these methods to determine their fees.

  • A separate fee for each form and schedule
  • Match the rate you paid last year (if it was the same accountant) unless your taxes have become more complicated
  • Value-based payments, which are based on how difficult they feel your taxes will be to file
  • Hourly rate, which can be expensive if they take several hours to finish
  • A minimum fee, plus extra compensation if your taxes are complicated

If you don't fully understand how much should I pay my tax preparer or don't feel completely comfortable with the method they use, let them know. They may be able to fill you in on why they use this particular method. If not, look for an advisor with whom you feel at ease.

Reduce Your Tax Preparation Cost

Whether you have a tax preparer handling your taxes or you are doing them yourself, it helps to be organized. If you are, it can cut down on the time you or your advisor spends filing your taxes, thus reducing the tax preparation cost and your tax preparation fees in 2021. With our online tools, you can create pay stubs, as well as W-2 and 1099 forms.
These tools will help you keep everything in one place when it comes time to do your taxes. Are you ready to organize your finances? Fill out one of our amazing paystub templates to discover how simple it can be! Try our professional pay stub maker now!

Frequently Asked Questions

Tax preparation fees were previously deductible as a miscellaneous itemized deduction, but due to the Tax Cuts and Jobs Act of 2017, this deduction has been eliminated for tax years 2018 through 2025.

Yes, there are various types of tax preparers, including certified public accountants (CPAs), enrolled agents (EAs), tax attorneys, and non-credentialed preparers. Each has different qualifications and experience.

While some tax preparers may be open to negotiation, it's important to remember that you're paying for their expertise and time. You should focus on finding a tax preparer that offers a fair rate and meets your needs.

Tax software can be a more affordable option for those with simple tax situations. However, if you have a complex tax situation or need personalized advice, hiring a professional tax preparer may be worth the additional cost.

To find a reputable tax preparer, ask for recommendations from friends, family, or colleagues, check online reviews, verify their credentials, and schedule a consultation to discuss their services and fees.

Tax preparers may charge a flat fee, an hourly rate, or a percentage of your refund. It's important to discuss the fee structure and get an estimate before hiring a tax preparer.

The cost of hiring a tax preparer varies based on factors like the complexity of your tax situation, where you live, and the professional's experience. On average, the cost ranges from $100 to $450 for individual tax returns.

Factors that can affect the cost include the complexity of your tax situation, the preparer's experience, geographic location, and whether you require additional services like bookkeeping or financial planning.

Tax preparation cost refers to the amount you pay to a professional tax preparer or a tax preparation service to file your taxes on your behalf.

Hiring a tax preparer can save you time, reduce errors, and potentially increase your refund or minimize your tax liability by identifying deductions and credits you may not be aware of.
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Tax Preparation Cost - The Ultimate Guide 2021
James Wilson

After graduating from McCombs School of Business in Texas, James joined ThePayStubs as a CPA to make sure the numbers we provide our clients are correct. Read More

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