Average Fees for Tax Advisors in 2024

Tax advisors, and other tax professionals, offer services from preparing and filing annual tax returns to comprehensive tax strategies that help minimize taxes and preserve wealth over time. Working with the right tax preparer can prove to be a valuable relationship, but understanding the costs associated with tax services can be complex. In this guide, we’ll explore the average fees of tax advisors in the US for 2024.

Table of Contents

1. Three Common Tax Advisor Fee Structures
2. Average Tax Advisor Fees in 2024
3. Cost Difference Between Types of Tax Preparation Services
4. What Drives Tax Preparation and Planning Costs?
5. How to Evaluate a Tax Advisor
6. Comparing Different Types of Professional Certifications for Tax Advisors
7. Tax Advisor FAQs

Three Common Tax Advisor Fee Structures

Tax advisors use various types of fee structures depending on the complexity of the services required.

The three primary tax advisor fee structures are:

1. Fixed per-service fees: Some tax advisors charge a set fee for individual services that allows for predictable but flexible billing based on the scope and complexity of services. This enables advisors to set minimum fees for clients and add on fees as more services are needed. Examples include fees for tax preparation, additional fees per tax forms, and fees for organizing a client’s tax information.
2. Hourly fees: Some tax advisors may have different hourly rates for different types of services based on client type and complexity. Additionally, different types of tax advisors—CPAs, tax attorneys, and enrolled agents—will likely all have different hourly rates based on their expertise and qualifications.
3. Retainer fees: For ongoing tax advisory services, some tax advisors might charge a monthly, quarterly, or even annual retainer fee. This fee can include year-round and as-needed consulting around specific issues or all-inclusive packages for outsourcing accounting and tax services. These arrangements may be a good fit for businesses and individuals with complex tax planning needs or multiple revenue streams.

To find out more about which tax advisor fee structure works best for your unique needs, sign up for Harness today.

Average Tax Advisor Fees in 2024

Understanding the typical tax planning and preparation fees can guide you in making informed decisions when engaging with tax professionals. Below, we’ll break down what you can expect to pay for common examples of the different types of fees that tax advisors charge in 2024.

*Costs can vary based on the complexity and scope of services provided. Therefore, costs can be higher or lower than what is reflected in this chart. The ranges provided are related to the cost charged by the Tax Advisor and may not incorporate additional expenses associated with implementing tax advice such as forming an estate or investing transactions.

These average costs give you an idea of what you can expect to pay and acceptable fee ranges for certain tax preparation and advisory services. Keep in mind that fees may vary widely depending on the complexity of your tax situation. 

Fixed per-service fees

Fixed fees are common for specific services that tax advisors consistently offer. For example, a CPA might charge a flat fee per tax form or schedule filed, which may cost anywhere from $500 to $1,500 or more, depending on the level of complexity.

It’s also common for tax professionals to offer fixed fees for annual tax preparation services. For simple returns, with a standard Form 1040 and state tax return, prices may start at around $500. For complex returns with additional income sources or business taxes may start at $1,500 or more per tax return. This fee can fluctuate based on your tax situation, ranging from basic tax filing to the inclusion of multiple income streams, deductions, and credits. Additionally, the average cost of a tax return varies depending on where you live in the United States.

Hourly fees

Hourly fees are where tax advisors and tax preparers charge a set rate for each hour of consultation or service provided. This rate can vary significantly based on the advisor’s qualifications, experience, and the service’s complexity. Hours fees might make sense if your situation doesn’t require consistent, ongoing attention but requires the expertise of a well-qualified tax professional.

For example, CPAs and EAs might charge anywhere between $150 and $400 per hour. The services under this bracket could range from tax return preparation and basic tax filing to more advanced financial planning, tax planning around equity compensation, and even IRS audit representation.

Tax attorneys’ hourly rates typically range between $200 and $550 or more, with large firms potentially charging $1,000 per hour or more. These fees reflect the specialized legal expertise they bring to the table. They often work on more complex legal tax matters involving legal disputes and audits, estate planning, or business tax intricacies. For example, a client navigating an IRS tax audit or litigation might engage a tax attorney, where the attorney’s negotiation skills and comprehensive understanding of tax law can be valuable.

Retainer fees

Retainer or subscription fees involve paying a tax advisor a recurring fee for a potentially wide range of services over a specified period, such as monthly, quarterly, or annually.

CPAs and tax attorneys offer retainer services ranging from around $1,500 to $10,000 or more annually. The costs are highly dependent on the complexity of the services. Retainer packages might include ongoing tax preparation services, tax consulting, quarterly tax filings, and proactive tax planning to optimize a client’s financial position. 

Retainer fee arrangements may be best for high-net-worth individual clients or business owners needing year-round tax optimization or accounting services.

Cost Differences Between Types of Tax Preparation Services

Who you hire to prepare your taxes or help you with tax planning should be based on your needs, and comes with very different costs depending on those needs. For example, individuals who qualify can use the IRS’s Free File and pay nothing for a federal tax return. In other cases, if you have more complex needs, you’ll likely need to use DIY tax software or hire a professional tax firm to ensure tax compliance and an optimized tax return.

What Drives Tax Preparation and Planning Costs? 

The types of services that you may need will dictate the price you pay. For commoditized tax preparation and compliance, you can expect to pay less than ongoing holistic tax planning that aims to create value rather than simply ensure that your taxes are prepared accurately.

Factors that may drive costs for tax preparation and planning include:

• The number and complexity of forms you require
• The number and complexity of income sources
• Tax planning needs such as safe harbor and quarterly estimated payments
• Founder and employee equity tax planning for stock sales, including 83(b) elections
• Optimizing taxes from investments, including tax-loss harvesting, asset location, and planning for new investments
• Charitable contribution tax planning needs, including using donor-advised funds, bunching donations, and qualified charitable distributions.

Bonus Guide: 20 Ways to Reduce Your Taxes in 2024: A Guide for Founders, Startup Employees, and Executives

How to Evaluate a Tax Advisor

Here are some essential points to consider when evaluating a tax advisor:

1. Check their credentials: Depending on the type of tax advisor you need, your advisor should have one or more of the following credentials: an active CPA license, a passing score on the IRS Special Enrollment Exam, or a law degree (JD) often with a Master of Laws (LLM) in Taxation. Additionally, all tax advisors are required to complete ongoing education and hold a PTIN if they prepare tax returns.
2. Ask lots of questions: Experience in tax planning is important, but even more so, the tax advisor that you select should have experience in the specific areas of expertise that will align with your needs. Ask about the types of clients CPAs, EAs, and tax attorneys have worked with in the past.
3. Understand their fee structure: Ask the tax advisor about their fee structure before engaging with them for services. Some fees may be determined beforehand, while others may not be known until the advisor begins work and fully understands the complexity.
4. Check their reputation: Look for online reviews, ask for client references, and check if they have any disciplinary actions through relevant state boards or the IRS Office of Professional Responsibility for Enrolled Agents.
5. Consider their working style: Consider whether you prefer a tax advisor you can meet with in person or a firm that works remotely. Additionally, think about how you prefer to communicate and to what degree the technological tools of the firm are important to you.

Comparing Different Types of Professional Designations for Tax Advisors

Selecting a tax advisor who meets your needs and you feel you can trust is crucial. There are three primary types of tax advisors, each with varying certifications:

Certified Public Accountant (CPA)

The standard background of a CPA includes earning a bachelor’s degree, completing 150 hours of education credit, and passing the Uniform Certified Public Accountant Examination, administered by the American Institute of Certified Public Accountants (AICPA). CPAs are licensed by state boards of accountancy in the state where they practice, with many states requiring an ethics exam, ensuring that CPAs are trained to handle ethical situations throughout their career. Additionally, CPAs must meet the continuing education standards in their state.

Enrolled Agent (EA)

EAs must pass the IRS’s Special Enrollment Examination (SEE), an exam covering a wide array of tax topics, including tax preparation for individuals and businesses, client representation, and tax practice and procedures. EAs must also obtain 72 hours of continuing education every three years with a minimum of 16 hours per year, including ethics training. The National Association of Enrolled Agents (NAEA) is the leading professional organization providing continuing education for EAs.

Tax Attorneys

A law degree is required to practice tax law, but many tax attorneys also pursue an optional LLM, or Legum Magister degree, in taxation to enhance their expertise in the subject. Tax attorneys can be affiliated with bar associations at the state and national levels, such as the American Bar Association (ABA). Many states require continuing legal education to remain current on tax law.

Tax Advisor FAQs

1. What factors impact the cost of tax preparation and advisory services in 2024?

The cost of tax preparation and advisory services can vary significantly based on several key factors. What you expect to pay for tax preparation and planning can depend on:

• Advisor’s credentials/expertise: Highly credentialed professionals like CPAs or tax attorneys may charge more due to their specific training and expertise that many have spent years obtaining.
• Organization of your tax documents: Well-organized financial records can reduce the time a tax advisor needs to spend on your tax situation, potentially lowering your tax preparation fees. If your files are disorganized, your tax advisor may add fees to account for the additional work.
• The complexity of your situation: More complex tax situations, such as tax strategies for business owners or individuals with multiple income sources, can increase fees.
• Time of year: Seeking advice during the busy tax season can be more expensive than during off-peak times, given a tax advisor will likely have to work extra hours or during non-business hours to handle your needs.

2. Do you need a tax advisor?

Whether you need a tax advisor depends on several personal factors:

• The complexity of your financial situation: If you have a complex scenario, such as tax questions for equity compensation, large investments, crypto investments, business ownership, or self-employment, you might benefit from professional tax preparation services and tax advice.
• Your time and expertise: If you have a complex situation and lack either the time or expertise to handle your taxes yourself, a tax advisor can take the burden off of you, applying their expertise to provide advice aligned with your goals.

3. Should you work with a CPA near you, or an online CPA?

The choice between a local CPA and an online CPA for tax preparation and planning comes down to personal preference with the following considerations:

• In-Person vs. remote meetings: Some individuals prefer face-to-face interactions and may choose a local CPA for personal meetings. Others might prioritize convenience and are comfortable working with an online CPA.
• Balance personal relationships and technology: Local advisors can offer a more personal relationship, while digital firms often provide advanced technology tools and a modern, streamlined experience.
• Availability of expertise: Depending on where you live, being open to working with a remote tax advisor can open up the field of expertise available to you. If you have a highly complex situation, you may be able to find a more qualified tax advisor in another state.

4. Do you need a tax advisor who specializes in crypto?

Given the evolving and complex nature of crypto taxation, a specialized tax advisor can be helpful, keeping the following in mind:

• Complexity of crypto taxes: Crypto investment tax preparation requires careful tracking of gains, losses, and transactions, which can be more manual and complicated than traditional investments.
• Specialized knowledge and tools: Advisors who specialize in crypto are equipped with the knowledge and tools necessary to navigate crypto taxation, making them particularly valuable for individuals with large amounts of crypto transactions or those who have not reported crypto activities in prior years.

5. What’s the difference between a tax advisor and a tax preparer?

What distinguishes a tax advisor, often called a tax consultant, from working with a credentialed or non-credentialed tax preparer comes down to the style and value of the relationship:

• Comprehensive advice: A tax advisor’s ability to provide holistic advice on tax strategy to minimize tax liabilities for their clients is a key differentiator compared to a tax preparer. One-off tax preparation requires less holistic planning compared to tax advisory services.
• Ongoing relationship: Tax advisors commonly engage with clients for months to years, creating an ongoing relationship to provide their clients value. Contrast this with tax preparers who commonly work with their clients once yearly to file tax returns, often only working with a client one time.Harness Can Help You Find the Right Tax Advisor

Harness Can Help You Find the Right Tax Advisor

If you need help navigating tax questions around equity compensation, business ownership, self-employment, or any other unique tax situation, Harness can match you with a tax advisor who can provide clarity around the complex landscape of tax laws and help you target your goal of reducing tax liabilities.

The right tax advisor will partner with you to understand your situation and optimize your tax strategy. From comprehensive planning to tax preparation, we’ll connect you with a tax advisor who has the experience to meet your specific needs. Get started with Harness today.

Tax related services provided through Harness Tax LLC. Harness Tax LLC is affiliated with Harness Wealth Advisers LLC, collectively referred to as “Harness”. Harness Wealth Advisers LLC is a paid promoter, internet registered investment adviser. This article should not be considered tax or legal advice and is provided for informational purposes only. Please consult a tax and/or legal professional for advice specific to your individual circumstances.