A $200 Surrender to the Tax Pro
What is it about hiring a financial professional that just makes us want to cuss?
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 in order to go broke. And we especially aren't too pleased about having to hire a tax professional to fill out our tax returns.
While it's true that many people can do all these tasks themselves, including filing their own bankruptcy petitions (called "pro ses"), there are many of us (myself included) who willingly and even graciously pay good, qualified professionals to ensure we don't mess up in areas where costly errors can easily occur.
Tax season begins with the new year, and so does the annual headache that accompanies it. This year, like last, Congress made a lot of last-minute changes to the tax code that will, without doubt, cause people to make some errors or miss important deductions.
Notably, there was a last-minute patch made to the alternative minimum tax. The Internal Revenue Service says that 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 now projecting.
If you have to hire someone to help you prepare your tax return this year, here's some solace: The cost isn't prohibitive.
The National Society of Accountants' 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 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 return can vary by region and, of course, your individual 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):
¿ New England (Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont) -- $193
¿ Middle Atlantic (New Jersey, New York, Pennsylvania) -- $209