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Finding the right deal on tax preparation costs

April 11, 2011

| MoneyRates.com Senior Financial Analyst, CFA

With the federal tax filing deadline looming, no doubt some of you are still scrambling to get your returns done. Others are already vowing to take a better approach next year. In either case, it might help to know what some of your options for tax preparation help are.

From simple online programs to intensive, in-person services, there is a wide range of tax preparation options available - and a wide range of costs for those services. GetRichSlowly.org recently posted an survey of different tax preparation services and their costs, and you might find this study useful background when you go to shop for tax help.

Range of tax preparation costs

The simplest federal returns can be prepared online for as little as $8 to $30 and you should expect to pay a similar amount for state returns. As you move up the ladder in complexity, the cost of online tax preparation services can rise to more than $50.

In-person tax preparation allows for more personal guidance and a discussion of things that could affect your particular tax situation, but expect to pay more for that kind of attention. How much more? It turns out that the cost varies significantly depending on where you are located. Tax preparation costs in smaller cities typically run in the $40 to $100 range. However, the GetRichSlowly study found these rates to be a little higher in Los Angeles, and significantly higher in New York City, where you should expect to pay in excess of $100 for tax preparation help.

One advantage of online tax preparation is that besides being cheaper overall, it eliminates these regional differences in cost structures.

Beyond cost

Cost is important, but it is not the only consideration in choosing a tax preparation service. A more expensive provider may be able to do more for you in certain situations - for example, only CPAs, Enrolled Agents, and tax attorneys are allowed to represent you at an IRS hearing. So, choose the level of service that fits your needs, and remember, no matter how your taxes are prepared, you are responsible for what is on the returns.

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