How much does it cost to file taxes?
The filing process is already tedious to many, especially the poor. The filing fees will also add to your problems. Without proper experience, you will end up with more severe tax issues.
The key is to prepare ahead. How much should you set aside when you pay taxes? Read on below for a breakdown of the cost of filing your taxes.
How Much Does It Cost to File Taxes?
How much does it cost to file taxes? It depends on the method that you’ll use for filing. One of the most common routes is hiring a tax advisor.
These professionals save you from all the complicated process of filing taxes. After all, tax advisors consider different factors for their fees. Some tax advisors charge an average minimum fee of $172.
The amount can go up depending on the complexity of the tax return. Others have a set fee for every form and schedule:
- Form 940 (Federal Unemployment) is $78.
- Form 941 (Employer’s Quarterly Return) is $96.
- Form 1040 and state return, no itemized deductions is $220
- Schedule C is $192
Most of today’s tax advisors charge an hourly rate that costs an average of $138.
How to File Your Own Taxes
You can also handle the filing yourself if you have time to spare. The traditional way is to fill out by hand and mail the IRS Form 1040 or Form 1040-SR. A better way is to file taxes online using tax software.
The software gives you online access to tax professionals who can answer your questions on-demand. They can do online reviews of your tax documents and file them online on your behalf.
You can get the tax software packages for as low as $39. Interestingly, you can file taxes online through the IRS Free File program. You’re eligible to pay taxes online for free if your 2021 adjusted gross income is $73,000 or less.
Single and married taxpayers can use the IRS Free File through any of the following services:
- Free 1040 Tax Return
- Online Taxes at OLT.com
These options come with their respective restrictions that apply to certain states and ages of the taxpayers.
Tips for Lowering Your Taxes
On top of preparing for the tax filing fees, work on lowering your tax bill. Reduce your taxable income by adding more money to your 401(k).
Buy municipal bonds and place your money on a local government entity. The interest in municipal bonds is federally tax-exempt.
Aim for long-term capital gains by investing in mutual funds and real estate. Hold your capital asset for over a year and enjoy 0%, 15%, or 20% preferential tax rates on your capital gains.
You can also start a business and deduct some expenses from your income. Check out Wealthability reviews to learn how to reduce taxes on your business.
Increase Your Financial Knowledge
We hope our guide answered, “how much does it cost to file taxes?” Use this knowledge to choose the best filing method. You can also prepare a budget and simplify the tax filing process.
Are you interested in more financial topics? Check out our other blog posts today.