Is $600 for tax preparation normal when working multiple jobs and moving states?

I'm a 23-year-old student trying to figure out if I'm being overcharged for my tax preparation. I don't usually have complicated taxes, but this year has been different. I moved from one state to another mid-year but didn't update my address right away due to some personal stuff going on. I worked 4 different jobs throughout the year - 2 before moving and 2 after relocating to my new state. On top of that, I had to make an early withdrawal from my IRA because of an emergency situation that came up during the move. My tax preparer is saying it's going to cost $600 to handle everything since they need to do calculations for both states, deal with the IRA withdrawal penalties, and sort through all my W-2s from different employers. Does $600 sound like a reasonable price for my situation? I'm on a student budget and wasn't expecting it to cost this much, but maybe the multiple states and IRA withdrawal make it more complicated than I realized?

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18 comments

Harper Thompson

•8M

$600 isn't unreasonable given your particular situation this year. You have several complicating factors that take extra time and expertise to handle correctly: 1) Multi-state filing is always more complex because your preparer needs to determine which income is taxable in which state, calculate partial-year residency in both states, and ensure you're not double-taxed on the same income. 2) Early IRA withdrawals require additional forms and calculations. Your preparer needs to determine if any exceptions to the 10% early withdrawal penalty apply in your situation, which requires gathering more information and documentation. 3) Multiple W-2s from 4 different employers require additional reconciliation, especially when split between states. These factors significantly increase the preparation time compared to a simple return. That said, you might want to get a quote from one other preparer for comparison, but be sure they understand all these factors before giving you a price.

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Harper Thompson

•8M

You could certainly try using tax software like TurboTax, H&R Block, or FreeTaxUSA. For your situation, you'd need their Deluxe or Premier version to handle the IRA withdrawal, and you'd need to pay for both state returns. With your level of complexity, expect to spend several hours working through it. The software will walk you through everything, but be prepared to answer lots of questions about your residency dates, income allocation between states, and reasons for the IRA withdrawal. Just make sure you understand the rules about partial-year state residency and have all your documents organized before you start.

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Jade O'Malley

•8M

I was in a similar situation last year - moved between states and had multiple jobs plus some retirement account complications. I was getting quoted $500-700 from traditional tax preparers until someone recommended taxr.ai (https://taxr.ai) to me. Their AI system analyzed all my tax documents, sorted out the multi-state issues, and guided me through handling my retirement account withdrawal. Saved me a ton of money and honestly handled my situation better than the first preparer I talked to who missed some deductions related to my move.

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Jade O'Malley

•8M

The AI is actually really good with state-specific rules. It asked me detailed questions about my residency dates and activities in each state, then applied the correct rules for partial-year residency. It even found a state-specific deduction I qualified for that I had no idea about. Regarding early withdrawals, it absolutely handles those well. It walks you through all the possible exceptions to the 10% penalty (first-time home purchase, education expenses, unreimbursed medical expenses, etc.) and calculates everything correctly. In my case, I qualified for a partial exception, and the system identified that based on my answers to its questions.

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Ella Lewis

•8M

Just wanted to update after trying taxr.ai that the previous commenter recommended. I was skeptical at first since my situation with multiple W-2s and an early 401k withdrawal seemed complicated, but it actually worked amazingly well! The system asked me detailed questions about why I took the withdrawal and ended up finding that I qualified for an exception I didn't know about (medical expenses over a certain percentage of income). Saved me about $430 compared to what my regular tax preparer was charging. The multi-state part was way easier than I expected too!

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Andrew Pinnock

•8M

If your main concern is figuring out if you qualify for any penalty exceptions on that IRA withdrawal, another option is calling the IRS directly to ask. I know, sounds crazy because nobody can ever get through, but I used this service called Claimyr (https://claimyr.com) that somehow gets you past the IRS phone tree and connected to an actual human. They have a demo video showing how it works: https://youtu.be/_kiP6q8DX5c. I used it when I had questions about an early 401k withdrawal and got clear answers directly from an IRS rep about my specific situation.

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Andrew Pinnock

•8M

Yes, it actually does work! It uses a combination of tech and timing to navigate through the IRS phone system when call volumes are manageable. I was connected in about 14 minutes when I had been trying for days on my own without success. I don't remember exactly what I paid, but it was definitely worth it for the time saved and peace of mind getting an official answer directly from the IRS. They don't claim to have special access - they just have a system that works better than randomly calling and hoping.

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Alexis Renard

•8M

I have to eat my words and apologize to the person who recommended Claimyr. I was 100% convinced it was a scam, but I was desperate after being on hold for over 4 hours across 3 different days trying to get clarity on my tax situation with multiple states. Decided to try it as a last resort and... I got through to an actual IRS representative in under 20 minutes. The agent answered all my questions about handling my multi-state taxes and cleared up my confusion about which forms I needed. Saved me hours of frustration and probably prevented me from making mistakes on my return.

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Camila Jordan

•8M

They did okay with my multi-state stuff, but I had to be really proactive and double-check their work. The person I got was relatively new and missed allocating some of my income correctly between states at first. After I pointed it out, they fixed it, but it made me wonder what else might have been missed if I hadn't been paying attention. If you go with H&R Block or similar, try to get their more experienced preparers and ask specifically about their experience with multi-state returns and early retirement withdrawals. The quality really varies depending on which preparer you get assigned to.

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