The Average Cost of Filing Income Tax

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The Cost of Filing Income Tax
The Cost of Filing Income Tax (Image: Comstock/Comstock/Getty Images)

The cost of filing an income tax return depends on your return's complexity. There is no filing fee associated with the government, but you usually have to pay someone to correctly prepare your return. Important factors include your location, adjusted gross income as well as tax credits and deductions. If you are single with no dependents and earning less than $40,000, then you can take advantage of free tax preparation. If you are single with two children and own a home based business, then you might pay between $50 to $100.

Basics

Unless you live in a state that does not require a state tax return, like Florida or Texas, you must prepare and submit two returns. Since most tax preparers can handle both federal and state returns, negotiate to add your state return for a relatively nominal fee (perhaps around $30 to $75).

Free

Many organizations offer free tax preparation throughout the United States. Organizations like AARP and VITA provide free tax prep for senior citizens and people with income less than $50,000. The services are available at local libraries, school, churches and community centers typically from January until April.

Self-prepare

There are many people who successfully prepare their own tax returns each year. You can file on your own either electronically or through a paper return. The less complex your return is, such as if you claim a standard deduction instead of itemizing, translates into a higher probability that you can file without significant errors. Plus, contact the IRS directly--(800) 829-1040 for individuals--for answers to your specific questions.

Software

Another option is to file using a tax preparation software. In fact, the IRS e-file program facilitates free tax prep for people who earn less than $57,000. For example, if you earned $25,000, you can use TurboTax and file your federal return for free plus your state return for about $27.

Considerations

Each year around January, many so-called tax preparation services materialize and offer quick, cheap returns. Be wary about using these services as the employees often are not knowledgeable and can create a financial headache for you, such as by incorrectly or falsely claiming tax credits. Also avoid services that offer to loan you money as an advance to your return refund. The refund loans charge extremely high-interest rates. Plus, if you select to have your refund directly deposited into your checking account, you should receive your refund within two to three weeks or in even less time if you file before April.

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