If you're a savvy business owner, you've probably wondered if you're charging the right amount for your tax preparation services. There is a lot to consider when determining what your prices should be, but a great place to start is looking at what average tax preparation fees are across the nation and in your state.
We recently conducted a survey where we gathered data from hundreds of tax professionals about how they price their tax preparation services for both individual taxpayers and businesses. We also compared the data we gathered this year to data from our 2018 and 2019 pricing reports (which also included information from the National Association of Tax Professionals and the National Society of Accountants). Here are some of the highlights:
Average national fees
The average national fees for common tax preparation forms are as follows:
Itemized 1040 and state return: $302
Non-itemized 1040 and state return: $221
1040 with a Schedule C: $400
Form 1120: $755
Form 1120-S: $721
Form 1065: $682
For itemized 1040s and a state return, that's a $29 increase in fees since 2018. Fees for preparing a non-itemized 1040 with a state return have gone up by $45 since 2018, and fees for a 1040 with a Schedule C have gone up by $40 since 2019.
Another interesting thing to note is that flat fee billing has become vastly more popular than hourly billing with 81% of surveyed tax professionals saying they primarily use the flat fee method.
States with the highest and lowest fees
North Dakota averages the lowest fees for preparing an itemized 1040 with a state return at $158 while Hawaii is the highest at $483. Other states in the top five for the lowest fees include Delaware, Rhode Island, Tennessee, Connecticut, and Nebraska. Other states charging the highest fees include Washington, Kentucky, Louisiana, and New York.
For non-itemized 1040s with state returns, Delaware comes in at the most affordable for taxpayers at $125. Washington charges the highest fees at $373. Other states with the most affordable fees include Alabama, Rhode Island, North Dakota, and Nebraska. The other four states charging the highest fees include Hawaii, Kentucky, New York, and Massachusetts.
To find out how your fees compare to your state average for both individual and business tax returns, check out our complete 2020 Tax Prep Pricing Guide. You'll also find information for how fees differ based on firm size.