We'll grudgingly pay pros to avoid costly tax errors

What is it about hiring a financial professional that just makes us want to cuss? People don't like to pay a financial adviser to manage their portfolios. Those in financial trouble find it ironic that they have to pay a bankruptcy attorney in order to go broke. And we especially aren't too pleased about having to hire a tax professional to fill out our tax returns.

While it's true that many people can do all these tasks themselves, including filing their own bankruptcy petition (called "pro se"), there are many of us (myself included) who willingly and even graciously pay good, qualified professionals to ensure we don't mess up in areas where costly errors can easily occur.

Tax season begins after New Year's, and so does the annual headache that accompanies it. This year, like last, Congress made a lot of last-minute changes to the tax code that will, without a doubt, cause people to make some errors or miss important tax deductions.

Notably, there was a last-minute patch made to the alternative minimum tax. The Internal Revenue Service says that as many as 13.5 million taxpayers, using five forms related to the AMT, will have to wait to file their tax returns until the IRS completes the reprogramming of its systems for the new law.

Taxpayers affected by the AMT legislation won't be able to file until Feb. 11, the IRS is now projecting.

If you have to hire someone to help you prepare your tax return this year, here's some solace. The cost to hire a professional tax preparer isn't prohibitive, according to the National Society of Accountants.

The association's biennial survey of nearly 8,000 tax preparers found that the average fee for an itemized IRS Form 1040 with Schedule A and a state tax return is $205, an increase of less than 2 percent from $201 in 2005.

The average cost to prepare a Form 1040 and state return without itemized deductions is $115.

"You reach a certain point of complexity and it goes beyond the average person's ability to do their own return," said Andrew T. Morehead, president of the National Society of Accountants.

The cost of preparing a tax return can vary by region and, of course, your individual tax situation. Take a look at what the organization found on a regional basis (the figures are for a Form 1040 with Schedule A and a state tax return):

New England (Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont) $193

Middle Atlantic (New Jersey, New York, Pennsylvania) $209

South Atlantic (Delaware, District of Columbia, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia, West Virginia) $217

East South Central (Alabama, Kentucky, Mississippi, Tennessee) $165

West South Central (Arkansas, Louisiana, Oklahoma, Texas) $210

East North Central (Illinois, Indiana, Michigan, Ohio, Wisconsin) $181

West North Central (Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota) $169

Mountain (Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah, Wyoming) $204

Pacific (Alaska, California, Hawaii, Oregon, Washington) $240

Most accountants bill on a flat-fee basis for tax preparation, Morehead said. However, some preparers will bill on an hourly basis.

The average cost is about $122 an hour nationally. You might also want to know that most accountants (77 percent) do not charge an additional fee for electronic filing. However, if a fee is charged, the average amount is about $23.

If what you pay is higher than the averages, don't go marching into your tax professional's office with accusations of being ripped off.

If you're handing your preparer a shoe box full of receipts and a mess he or she has to sort out, you are going to pay more. If you have a small business or income from multiple jobs or schedules to file, your return may also cost more to prepare.

"People can use the average figures as a general guide," Morehead said.

The fee survey should, however, encourage people to question what they are being charged, Morehead added. Don't ever be intimated or embarrassed to talk to your tax accountant or preparer about what you are being charged, he said.

Additionally, if a preparer is charging you a fee based on a percentage of what you get in a tax refund, Morehead said to be wary about hiring that person.

He issued this warning: "That practice is not illegal but it's a sign that you should be very careful because something is going on." I certainly wouldn't agree to such a fee arrangement.

I should also note that taxpayers with $54,000 or less in adjusted gross income can use the IRS' Free File system to electronically submit their returns at no charge. Free File is only available by going through the IRS at The IRS says 90 million taxpayers qualify for this free service. It's also available in Spanish.

And if this is the tax year you finally throw your hands up in frustration, no use in fussing about it. If you check the person's credentials and find a qualified individual, it's worth having a professional make sure your tax return is prepared properly.

Write to Michelle Singletary, in care of The Washington Post, 1150 15th St. N.W., Washington, D.C. 20071, or e-mail her at