It’s a new year and tax season can’t be far behind. Nationally, 2016 saw more than 147 million individual tax filings, 127.2 million (88 percent) of which were E-filed and 74.5 million of the E-filed returns were prepared by tax professionals, and that’s big bucks.
According to the National Society of Accountants, the average cost of professional CPA tax preparation was $273 in 2015 for a “typical” 1040 Tax Form with itemized deductions (Schedule A) plus a state tax return. That would be a $20 billion market for individual filings nationwide. However, the average cost for the west coast, Alaska and Hawaii was much higher, $348 per return.
Be very careful when getting tax advice online, organizations such as the US Tax Center run by irs.com and similar sites actually have no affiliation with the U.S. Government. Look for the “.gov” in the Internet address to make sure you’re going to the source.
There are 38 registered preparers in San Benito county, with several offices in Hollister. There are also free tax preparation programs available.
The largest segment of tax preparation professionals in California are certified public accountants (CPAs). CPAs and some others are exempt from registering with the state. Others who assist with or prepare a state or federal income tax return for a fee must be registered as tax preparers with the California Tax Education Council (CTEC).
While the total number of CPAs and other exempt persons are unknown not all do tax work; the registry showed 38 non-exempt and non-CPA tax preparers registered locally as of December, 2017. That would equate to about 58,000 statewide.
Like all businesses sectors that thrive, tax preparers fill a need. That need is navigating the ever more complex tax code landscape at every level of government for those not requiring professional help to the level and expense of a CPA.
Every new tax bill is the occasion for hoopla and political attacks, but it also means difficulties in keeping up to date for the average filer. Until the system changes it may be worthwhile to find a CPA or experienced professional preparer.
Self-help tax software is also big business with 53 million filings in 2017, about half of them using Intuit's TurboTax. TurboTax products and services alone generated $1.47 billion in total revenues for Intuit according to ProPublica and Intuit has been accused of lobbying heavily against simplified tax systems; that should surprise no one.
Most individual filers are lending the federal government money at zero percent interest. In 2017 the IRS made 108.7 million individual refunds worth $302 billion, an average of $2,782 per refund.
I received a refund, but I did not get a thank you letter.
(Data source for filing and refund statistics: https://www.irs.gov/newsroom/ )