Tax season can be a headache for everyone, but Americans are now up against significant price hikes on their taxes as well.
The consumer price index for January showed the price of paying for tax preparation services climbed by 11 percent, and this could make a significant impact on Americans who are just struggling to get by amid persistent inflation.
While do-it-yourself software starts at around $50, filing a complex return can cost you in the $200 to $1,000 range, experts say.
True Tamplin, the founder of Finance Strategists, said tax preparers have raised rates for a range of different reasons, labor shortages being chief among them.
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“Accounting professionals are seeing higher demand and lower supply, driving up service costs,” Tamplin told Newsweek.
And as tax laws become more complex each year, accountants also end up buying more advanced software features, which ups their costs to consumers.
“It’s a sign of the times,” Alex Beene, a financial literacy instructor for the state of Tennessee, told Newsweek. “Most tax services, even those heavily automated, are having to pay staff more to retain them, and those expenses get passed along to customers.”
For those still looking to save this tax season, there are still options available. Some do-it-yourself tax software offers discounts for students, seniors or based on income.
And community libraries and nonprofits often offer free or low-cost tax assistance programs, so it helps to search for these wherever you live.
Plus, those with an adjusted gross income lower than $79,000 can file for free using the IRS’s Free File Fillable Forms. Just keep in mind, this doesn’t apply to state returns and you will have to check all the math yourself.
The IRS Direct File also launched this year, with the option to file for free in several pilot states. If the program is a success, the IRS plans to begin providing the option more broadly across the country.
Generally, if you’re a W-2 employee, you should be able to fill out a basic form or stay on the free tier of platforms like TurboTax, Tamplin said.
Still, many Americans depend on tax preparers for complicated filings.
“People who have a high amount of itemized deductions and other tax credits that may lower their tax liability should talk with a tax professional since the cost of hiring one typically is much cheaper than the amount a professional is able to save you,” Tamplin said.
If more Americans choose to file on their own instead of paying a professional due to the increased costs, there could be some fallbacks though.
“Self-filing with complex software can lead to mistakes and potential IRS audits,” Tamplin said.
Uncommon Knowledge
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Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.