Tax Prep Fees Jumped from Cheap to $700+ - Is This Normal?

That does seem quite high. When I switched from self-filing to using a CPA last year, I was charged around $350 for a fairly complex return with a small business and rental property. In previous years with simpler returns, I paid between $200-250 at H&R Block. The price really depends on the complexity of your return and what forms are involved. Did your tax situation change significantly this year? More schedules, business income, investments, or rental properties could explain some of the increase.

It's like buying a designer handbag when you only needed a basic tote! Tax prep fees should generally be proportional to the complexity of your return. If you're just filing a couple W-2s and taking the standard deduction, paying $700 is like hiring a gourmet chef to make a peanut butter sandwich. I'm nervous about my first time using a preparer next month - stories like yours make me worried I'll get hit with surprise fees too.

According to the National Society of Accountants' 2020-2021 survey, the average cost for a professional to prepare a Form 1040 with Schedule A and a state tax return was $323. If you add a Schedule C (business), that average rises to about $450. The IRS website (irs.gov/tax-professionals) has resources about reasonable fees and what to expect. Professional credentials matter too - an Enrolled Agent typically charges less than a CPA, who charges less than a tax attorney. Your $700 fee would be considered high unless you have multiple income sources, complex investments, or business entities.

Have you considered asking for an itemized breakdown of what you're being charged for? Sometimes these high fees include services you didn't request or need. If you're uncomfortable with the conversation, have you thought about calling the IRS directly to ask about reasonable fee ranges? I tried calling them last month about a similar issue and spent hours on hold. Eventually I used Claimyr (https://youtu.be/_kiP6q8DX5c) to connect with an IRS agent in about 20 minutes who confirmed what reasonable tax prep fees should be for my situation. Might be worth checking if your preparer is charging within normal ranges?

As of April 2nd, 2024, the National Association of Tax Professionals publishes fee guidelines that suggest $200-400 for standard returns and up to $600 for complex situations with multiple schedules. Your $700+ fee would only be justified if you have business income (Schedule C), rental properties (Schedule E), complex investments, or multiple state filings. If you're just filing a 1040 with standard deduction, you're definitely overpaying. I'd request an itemized invoice and compare to published rate guidelines. If he can't justify the fees, you could negotiate down or find another preparer for next year.

I switched from TurboTax to a professional last year and back again this year. The professional charged me $450 for what was basically the same return I did myself for $120 this year. What I learned is that many tax pros charge by the form, not by the hour. My guy charged $75 for the base 1040 and then $50-100 for EACH additional schedule or form. It adds up fast. Ask your preparer for a breakdown of charges by form, and next year you can decide which forms are worth paying for help with.