How Much Does A Tax Preparer Make Per Client?

Are you considering the job or position of a tax preparer and need clarification on your earnings? Technically speaking, according to the Tax Foundation, the average tax preparer makes an annual salary of $35,000.

The average tax preparer also can expect to gross around $200 in profit each year on their business, which means that they could make thousands of dollars filing taxes for others.

But how much does a tax preparer make per client, and how much does the average self-preparer return cost? Here is all you need to know about your earnings as a tax preparer.

What Is A Tax Preparer?

Tax preparation involves preparing tax returns for a person or organization other than the taxpayer, and generally for compensation.

A taxpayer can do tax preparation, often called a tax preparer, with or without the help of preparation software and other online services.

Tax preparers often calculate, file, and assist with simple and complex tax returns. The main goal of these professionals is to maximize clients’ tax returns while complying with legal expectations.

In addition to tax assistance, tax preparers can provide bookkeeping, accounting, and payroll services. Many tax preparers work full-time, part-time, or independent contractors for accounting firms or private companies.

Although these professionals typically work year-round, many are busiest during tax season.

How Much Does A Tax Preparer Make?

The amount of money taxpayers make varies by area. A tax preparer earns an average of $49,550 per year. In major metropolitan areas such as San Jose, Abilene, Boulder, and New York City, averages increase between $64,000 and $78,000.

Nonmetropolitan areas such as eastern Kentucky, southeastern Oklahoma, and eastern Utah tend to have lower annual salaries, with averages between $19,000 and $40,000.

There are some exceptions; areas such as Western North Dakota, South Central Wisconsin, Northwest Iowa, Southwest Minnesota, and West Central-Southwest New Hampshire have averages closer to metropolitan areas”; between $51,000 and $63,000.

How Much Does A Tax Preparer Make Per Client?

Tax preparation fees vary depending on the type of business they work for. 

A self-employed tax preparer will typically charge less than their employed counterpart, who may make more if they have access to advanced technical skills or other advantages. 

The average tax preparation fee for individuals is about $200, but it can be as high as $1,000 or even higher. 

The amount you pay for your accountant doesn’t just depend on how much you earn and what kind of client you are.

Suppose you own a large corporation with many employees with complex paperwork, like a Fortune 500 company. 

In that case, hiring an accountant may cost more than someone who owns one small business with few employees and very little paperwork involved in managing their day-to-day operations.

The average self-prepared return costs $39 for the federal return and $30 for the state return.

The average self-prepared return costs $39 for a married couple filing jointly and $28 for a single person with no dependents; this includes standard and itemized deductions but no personal exemptions.

Self-employed individuals may deduct their W-2 wages, but only up to 20 percent of their gross income will be taxable if they itemize their taxes instead of taking the standard deduction that everyone else does.

When you hire a tax preparer, you’re paying for the services of an expert. You can expect to pay between $200 and $300 per hour for tax preparation services. 

The average fee is $200, but it will vary depending on your situation and the complicated process. Suppose your taxes are simple enough that they don’t require any special software or knowledge of specific laws and regulations. 

In that case, there’s no reason you shouldn’t be able to find someone who charges less than that amount, but remember that many people use software programs like TurboTax, which costs about $40, or H&R Block Free Edition, which costs about $15.

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Tax Preparation Fees Depend On A Number Of Factors

The amount you make depends on how many clients you have, the complexity of your taxes, and the type of tax preparer you are working with.

  • The more complex the return, the more likely additional fees will be involved in preparing it. This can include things like:
  • An audit fee if an IRS team member audits your return after it has been filed or even before filing.
  • A fee for preparing any amended returns or other forms that need to be filed after filing your original return.

The average tax preparer can make thousands of dollars filing taxes, regardless of whether they work for themselves or another company.

According to the Tax Foundation, the average self-employed tax preparer will earn $10,000 annually, not including any profits from extra services like payroll and investment advice. 

That’s more than double what Americans make on average and more than an unemployed person would earn.

Salary Of A Tax Preparer By Education

A professional can follow several paths to become a tax preparer. Tax advisors do not have to meet any fixed educational or certification requirements. Many tax preparers come from an academic background in accounting or finance.

Tax preparers who receive payment for their jobs on federal tax returns need a preparer tax identification number (PTIN) from the IRS. 

Agents must also hold a valid PTIN, which authorizes them to perform tax preparation for their clients.

Their knowledge of the provisions of the Tax Code must include the following:

  • Deep understanding of archiving practices
  • Knowledge of Federal, state, and local tax remittance, rebates, and credits
  • Current information on changes to the tax code and their application in individual cases

Salary Based On Experience

Experienced tax advisors benefit from the knowledge and insights they have accumulated throughout their careers. More experience can increase their job performance and lead to higher salaries. 

Qualified tax preparers who help their clients realize significant savings that might otherwise be lost may also qualify for valuable bonuses.

Salary Based On Location

Employers who operate across broad areas often use location-based pay to set wages. Location-based strategies pay workers higher or lower wages for comparable work. 

Workers living in areas with a higher cost of living earn more, while individuals in more affordable areas earn less.

This concept highlights wider trends across the wider labor market. Employers whose team members live in higher-cost areas tend to pay a salary premium. 

The opposite tends to be true for employees residing in cheaper locations. Local labor market conditions can play a role in determining the income of tax subjects. 

When the demand for skilled tax preparers is higher in a concentrated area, salaries tend to rise. This reflects increased competition among employers to get the best people from available talent.

FAQ

How Much Does A Tax Preparer Make?

As of May 2021, the US Bureau of Labor Statistics (BLS) has reported that the median annual earnings of a taxpayer at just over $51,000 per year. 

September 2022 salary scale figures show a slightly lower average of around $48,710 annually.

How Much Does H&R Block Pay Seasonal Tax Preparers In Texas?

How much does a Tax Consultant make at H&R Block Texas? Average H&R Block Tax Preparer hourly wages in Texas are approximately $15.24, which is 10% below the national average.

How Much Do Tax Preparers Make In Florida?

The average salary for a certified tax preparer in Florida is $44,141 in November 2022, but the range is typically between $39,739 and $49,277.

How Many Tax Returns Does A Tax Preparer Do In A Day?

A good average of tax returns completed daily is around ten, depending on your subjective circumstances.

Is A Tax Preparer A Good Side Hustle?

A tax preparer is a good side hustle. This is because it is a service that is always in demand, and you can get an excellent hourly rate.

Are Tax Preparers In High Demand?

Most of us may not have the energy and time to learn how to prepare our own income tax returns, especially since tax codes change frequently. For this reason, there is always a high demand for reputable and reliable tax preparers.

Is It A Good Idea To Become A Tax Preparer?

Tax preparation is a challenging task, but it is profitable. Professional tax preparation has strong revenue potential and minimal costs. 

It’s not uncommon to earn $100 an hour completing a 1040 individual tax return, and that number increases as you learn to tackle more complex returns.

Is Learning To Be A Tax Preparer Hard?

Becoming a tax preparer can be easy compared to the rocky path of similar businesses, such as becoming an insurance agent. 

Tax preparation can be a distinctive profession, which means that it is not year-round but seasonal.

Can You Freelance As A Tax Preparer?

This means that a motivated solopreneur without a secondary education can be taught as a freelance tax preparer for as little as $100.

What Is The Best Tax Preparation Program?

ProSeries Professional: The best overall professional tax preparation software. ProConnect Tax Online: Best for QuickBooks Online ProAdvisors. TaxAct Professional: The best value for preparing unlimited returns.

Conclusion

So, how much does a tax preparer make per client? The average tax preparer can make thousands of dollars filing taxes, regardless of whether they work for themselves or another company. 

They also have access to experts with years of experience with clients and know what questions will be asked during the process. 

The job of a tax preparer is good, and if you take the guides in this article to heart, you’re off to a good start.

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