TBO.com - TBO is Tampa Bay Online

Hiring Tax Pro Might Be Good Investment

ADVERTISEMENT

The Tampa Tribune

Published: January 13, 2008

People don't like to pay a financial adviser to manage their portfolios. Those in financial trouble find it ironic that they have to pay a bankruptcy attorney to go broke. And we especially aren't too pleased about having to hire a tax professional to fill out our tax returns.

Although many people can do all these tasks themselves, there are many of us who pay good, qualified professionals to ensure we don't mess up in areas where costly errors can easily occur.

Tax season has begun - and so has the annual headache that accompanies it. Like last season, Congress made a lot of last-minute changes to the tax code that will cause people to make errors or miss important deductions.

Notably, there was a last-minute patch made to the alternative minimum tax. The IRS says as many as 13.5 million taxpayers, using five forms related to the AMT, will have to wait to file their tax returns until the IRS completes the reprogramming of its systems for the new law. Taxpayers affected by the AMT legislation won't be able to file until Feb. 11, the IRS is projecting.

Minimal Cost Increases

If you have to hire someone to help you prepare your tax return, here's some solace. The cost to hire a professional tax preparer isn't prohibitive, according to the National Society of Accountants.

The association's biennial survey of nearly 8,000 tax preparers found that the average fee for an itemized IRS Form 1040 with Schedule A and a state tax return is $205, an increase of less than 2 percent from $201 in 2005.

The average cost to prepare a Form 1040 and state return without itemized deductions is $115.

"You reach a certain point of complexity, and it goes beyond the average person's ability to do their own return," said Andrew T. Morehead, president of the National Society of Accountants.

The cost of preparing a tax return can vary by region and, of course, your tax situation. Take a look at what the organization found on a regional basis. (The figures are for a Form 1040 with Schedule A and a state tax return, where applicable.)

South Atlantic (Florida, Delaware, Georgia, Maryland, North and South Carolina, Virginia, West Virginia, District of Columbia): $217

New England (Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont): $193

Middle Atlantic (New Jersey, New York, Pennsylvania): $209

East South Central (Alabama, Kentucky, Mississippi, Tennessee): $165

West South Central (Arkansas, Louisiana, Oklahoma, Texas): $210

East North Central (Illinois, Indiana, Michigan, Ohio, Wisconsin): $181

West North Central (Iowa, Kansas, Minnesota, Missouri, Nebraska, North and South Dakota): $169

Mountain (Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah, Wyoming): $204

Pacific (Alaska, California, Hawaii, Oregon, Washington): $240

Survey As A Guide

Most accountants bill on a flat-fee basis for tax preparation, Morehead said. However, some preparers will bill on an hourly basis. The average cost is about $122 an hour nationally. You might also want to know that most accountants (77 percent) do not charge an additional fee for electronic filing. However, if a fee is charged, the average amount is about $23.

If what you pay is higher than the averages, don't go marching into your tax professional's office with accusations of being ripped off. If you're handing your preparer a shoe box full of receipts and a mess he or she has to sort out, you are going to pay more.

The fee survey should, however, encourage people to question what they are being charged, Morehead added. Don't ever be intimated or embarrassed to talk to your tax accountant or preparer about what you are being charged, he said.

Share this:

Loading Comments...

Email Print

ADVERTISEMENT