Higher tax filing costs could take a bite out of your refund

Taxpayers are facing higher costs to file their returns this year. Some will find relief from a new tool from the IRS called Direct File, but many won’t.

Taxpayers are facing higher costs to file their returns this year. Some will find relief from a new government tool. Many won’t.

The costs of tax return preparation and other accounting fees rose 8.3% — steeper than the current 3.4% inflation rate — between November 2023 and the same month the year before, the latest federal data show. That category reflects the growing costs of using DIY tax software and of hiring an accountant.

Many tax preparation firms, like other employers, have had to offer higher pay to attract workers in an industry short on accountants as fewer college students pursue accounting degrees.

“A lot of older preparers are retiring [and] the client base is expanding, so we need to hire more staff,” said Atiya Brown, a certified public accountant and owner of Dallas, Texas-based The Savvy Accountant. She estimates she and her peers have raised prices by 7% to 12% to offset higher costs for labor and software.

The average cost for filing an individual return rose to $248 in 2023 from $213 in 2021, a study released in August by the National Association of Tax Professionals shows, basically in line with government data tracking price increases for these services.

https://www.nbcnews.com/business/economy/higher-tax-filing-costs-take-bite-refund-rcna135161

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