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$176: The Average Cost of a Nonitemized Form 1040 in 2017

Feb 6th 2017
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For accountants and tax return preparers who wonder if they get paid enough for the lunacy that is busy season, a recent survey by the National Society of Accountants (NSA) offers some comparisons to mull over.

The quick take from the 2016-17 NSA Income & Fees of Accountants and Tax Preparers in Public Practice Survey Report: Fees for accounting services and tax preparation will rise nationwide this year by 6.1 percent and 6.4 percent, respectively.

The average fee for the preparation of an itemized Form 1040 with a Schedule A and a state return is $273, the average fee for a Form 1040 without itemized deductions and a state return is $176, and an itemized Form 1040 with a state return and Schedule C averages $457.

For those professionals with clients who dilly-dally, the majority (71 percent) add fees for disorganized or incomplete files, 33 percent charge more for filing extensions, 22 percent add on for information received after a deadline, and 24 percent charge more to expedite returns.

Naturally, fees vary by region, firm size, population, and economic strength of an area. The following are the average tax-preparation fees for an itemized Form 1040 with Schedule A and a state return in each US census district:

  • New England (CT, ME, MA, NH, RI, VT): $333
  • Pacific (AK, CA, HI, OR, WA): $329
  • Middle Atlantic (NJ, NY, PA): $290
  • West South Central (AR, LA, OK, TX): $271
  • South Atlantic (DE, DC, FL, GA, MD, NC, SC, VA, WV): $268
  • Mountain (AZ, CO, ID, MT, NV, NM, UT, WY): $263
  • East North Central (IL, IN, MI, OH, WI): $249
  • West North Central (IA, KS, MN, MO, NE, ND, SD): $214
  • East South Central (AL, KY, MS, TN): $210

The report delves a lot deeper into a range of fees for client services, various tax form preparations, practice procedures, and operational expenses.

Here are some key takeaways:

  • Fee hikes for tax and accounting practices are fairly common, with 49.8 percent increasing fees annually, while a third of the firms opted for every other year. Slightly more than a third (37.4 percent) of accountants increase their fees annually, while 34.4 percent do so every other year.
  • The average hourly fee for estate and financial planning is $163; for audits of financial statements, the average hourly fee is $157.
  • The top three highest average fees for form preparation are $1,563 for a Form 706 (estates), $826 for a Form 1120 (corporation), and $809 for a Form 1120S (S corporation).
  • The bottom three lowest average fees for form preparation are $53 for a Form 8965 (health coverage exemptions), $57 for a shared responsibility payment calculation, and $58 for a Form 1095-A (health insurance marketplace statement).
  • The majority (89 percent) of tax and accounting professionals offer free consultations.
  • Engagement letters are required by 58 percent of accountants for tax preparation and 42.7 percent for accounting work.
  • Firms’ biggest expense is salaries and benefits (38.1 percent of expenses), followed by technology (11.8 percent), occupancy (10.3 percent), office supplies (8.9 percent), and education (6.7 percent).
  • The average number of employees decreased from 4.2 to 3.5, but seasonal employees increased from an average of 2.3 to 3.2.
  • The average gross income for full-time employees is $100,212.

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