How Much Should you be Paying for Tax Preparation?

If you are still expecting to pay $200 for a professionally prepared tax return, here is the blunt reality. Those days are gone and they are not coming back.

This is not just about the tax industry. Inflation over the last five years has pushed the cost of everything up rapidly. Rent, wages, software, insurance, continuing education, and compliance costs have all increased. Tax preparation did not get a free pass. What used to be sustainable pricing simply is not anymore, especially for professionals who intend to stay in business and stand behind their work.

On top of that, there is a nationwide shortage of accountants and tax professionals. Fewer people are entering the field, experienced preparers are retiring, and the workload per return has increased. At the same time, IRS enforcement, automated matching, and penalty exposure have ramped up. That combination means fewer qualified preparers taking on more risk, and pricing has adjusted accordingly.

Today, $400 to $600 is the going rate for most individual tax returns that involve more than the absolute basics. That includes W-2 income combined with dependents, credits, investments, healthcare reporting, or anything that requires judgment instead of straight data entry. In high cost of living areas, those numbers are often higher, and that is normal, not an exception.

For self employed taxpayers, the shift is even more pronounced. $700 is now the starting point, not the ceiling. Schedule C returns require reviewing bookkeeping, evaluating deductions, handling depreciation, addressing estimated taxes, and making decisions that software alone cannot reliably handle. As income and complexity increase, fees rise with them, and that is appropriate given the time and liability involved.

Now for the part many accountants will not say out loud. If you truly have a simple, bare bones W-2 only return, no investments, no side income, and no surprises, online software is capable of handling that just fine. In that situation, you probably do not need an accountant, and paying professional rates may not make sense for you. There is nothing wrong with that.

The problem arises when people with more complexity assume they still fall into the simple category or expect professional oversight at DIY prices. When someone offers to prepare returns for $200 today, something is being skipped. That might be review, planning, documentation, experience, or accountability. You just do not find out which until there is a notice, a missed opportunity, or a costly fix later.

Tax preparation costs more now because it has to. Inflation changed the baseline, complexity raised the stakes, and the labor shortage narrowed the field and the market adjusted.

The real decision is not whether tax preparation should be cheaper. It is whether your situation justifies professional help and if it does, whether paying for it upfront is cheaper than paying for mistakes later.