Filing taxes is rarely straightforward, and mistakes can happen even when you’ve been diligent. From accidentally omitting income to missing out on crucial deductions, the tax process can become complicated. This is where filing an amended tax return becomes necessary.
The burning question for many who realize they’ve made a mistake on their tax return is: How much will a CPA charge me for an amended tax return? The answer depends on a number of factors, including the complexity of the taxes, the CPA’s expertise, and even where you are located.
Whether you’re filing a simple amendment for a missed deduction or a more complex adjustment affecting net investment income tax or business income, understanding these costs will help you to make an informed decision.
What are legitimate reasons for filing an amended tax return?
Filing an amended tax return is not just about mistakes. There could also be omissions due to a lack of knowledge, such as forgetting to report income from a side gig, like freelancing.
SBOs are often confused about what deductions they can legitimately claim, and when it comes to light that they could claim more deductions they want to make amendments. There are also elements such as capital gains, an additional child tax credit, or an earned income credit that might encourage taxpayers to want to amend a tax return.
In other cases, new information may come to light after you’ve filed - such as receiving a late form 1099 - that necessitates a correction.
The IRS allows individual taxpayers to file amended returns using Form 1040-X for up to three years after the original return was filed. This grace period is welcomed by taxpayers who may have discovered errors too late but still want to correct their filing and potentially claim additional refunds.
Factors that affect the cost of filing an amended return
Complexity of the tax amendment
The biggest factor that affects how much a CPA will charge to file an amended return is the complexity of the changes. If you simply forgot to report a small amount of income the process will be much quicker than if you want to claim a new set of deductions to lower your self-employment income.
For taxpayers who own businesses or rental properties, amendments can get particularly tricky. Small businesses or real estate investors may face higher fees due to the intricate nature of tax laws governing these sectors.
CPA’s expertise and experiences
The rates a CPA or tax professional charges often reflect their level of experience and specialization. CPAs who work in larger cities tend to charge more because of higher demand and a more competitive market. Additionally, CPAs who specialize in particular fields (such as oil, gas, aviation or manufacturing) often charge premium rates due to their niche expertise.
The price you pay for a CPA’s service is more than just the hours they spend on your tax amendment; it also includes their knowledge and expertise. It is this expertise that can save you money in the long run. When you hire a CPA, you invest in accuracy and peace of mind.
Looking for personalized service from a CPA firm that understands your unique situation? Hall Accounting Company can help with amendments and offer tax return preparation and tax planning services. Schedule a free consultation today, or use the handy Taxation Calculator to get a quote.
_________________________________________________________________
If you're wondering about the broader costs associated with accounting services in Dallas area, check out this detailed guide on how much an accountant costs in Dallas.
_________________________________________________________________
Average cost for amended tax return
The fee for filing an amended tax return can vary significantly, but a general range is between $200 and $1,500. Here is a more detailed breakdown of these costs based on different factors.
Simple errors
Filing an amended tax return due to a minor error like a missed form (like a W-2 or 1099) will fall into the $200 - $400 range. This applies to straightforward cases where the CPA doesn’t have to spend much time on the return.
Moderate adjustments
Amending a return to claim or correct tax credits, such as the earned income credit, or the additional child tax credit, could push the cost up between $400 to $800. The CPA needs time to verify the eligibility of these credits and ensure accuracy and this will affect the final cost.
Most accounting firms use their own software to calculate accurate taxes. If you are not a regular client, they will have to recreate your tax return on their system and that will take longer and therefore require a higher fee to be charged.
Complex cases
For more complicated cases - such as revising business income, making changes to investment portfolios, or addressing rental income - you can expect feeds in the range of $800-$1,500. This is especially true for taxpayers who own multiple businesses, have significant real estate investments, or deal in other complex tax matters.
Most CPA firms that offer accounting services will also offer to do your tax returns if you’re a small business owner. This can take a great deal of stress off your shoulders. However, you are ultimately responsible for checking all the information on the tax return. A mistake made by your CPA (when you have provided all information and documentation) should be handled by the CPA. Most firms understand this and, therefore, do not charge additional fees.
Check with the accounting firm whether they will charge for amendments to your tax filing, and how much they will charge before you sign up for their services.
Common reasons for using a CPA to file an amended tax return
There are a number of reasons small business owners and individual taxpayers choose to use a CPA to correct a tax return.
Service | Average Cost |
Omitted income: If you’ve forgotten to report income, such as from a side gig, investment income, or a late form 1099, an amendment is necessary to correct the original filing. | $200-$400 |
Incorrect filing status: Mistakenly choosing the wrong filing status (e.g., single vs. head of household) can affect deductions and tax liability. | $200-$400 |
Missed deductions or credits: You may have forgotten to file eligible deductions or tax credits, like the earned income credit, child tax credit, or education-related deductions. Filing an amendment lets you take advantage of these missed opportunities. | $200-$800 |
Incorrect deductions or credits: If you’ve mistakenly claimed a deduction or tax credit for which you are eligible, an urgent amendment is required to avoid penalties or an IRS audit. | $200-$400 |
Changes in dependents: Incorrectly claiming or failing to claim a dependant can impact your eligibility for certain deductions and credits. | $200-$800 |
Filing errors: Mathematical or clerical errors in your original filing that alter your tax liability | $200-$400 |
Investment or capital gains adjustments: Changes or misreporting of investment income, stock sales, or capital gains/losses will require an adjustment, especially if you receive new information from brokers after a filing deadline. | $800-$1,500 |
Changes to business income or deductions: If you own a business and later realize you’ve overstated or understated income or missed allowable deductions (such as for depreciation or a home office), an amended return can help you correct this. | $800-$1,500 |
Tax law changes: Occasionally, tax laws change retroactively, or the IRS issues audit guidance that affects your prior returns. | $200-$400 |
Correcting retirement contributions: If you’ve contributed to an IRA or retirement account and it wasn't correctly reflected in your tax filing. | $200-$400 |
Nontaxable income reported as taxable income: Sometimes, due to lack of understanding, taxpayers incorrectly report nontaxable income (e.g., insurance payouts, certain gifts, or inheritance) as taxable. | $200-$800 |
Claiming a loss carryforward: If you’ve experienced losses that you failed to apply against income in future years, you can file an amended return to claim these losses. | $200-$400 |
Correction of alternative minimum tax (AMT): If you’ve mistakenly triggered AMT or need to adjust the calculator, and amendment will resolve this. | $200-$400 |
Why hiring a CPA is worth the cost
Some people may balk at the idea of paying up to $1,500 for an amended return, but the value a CPA provides goes beyond simply filling out paperwork. Here are a few reasons why hiring a CPA is worth it.
Accuracy and compliance
Filing an amended return correctly is crucial to avoid further problems such as an IRS audit, penalties, and further scrutiny. A CPA ensures your return is accurate, and if you hire a CPA firm to do your tax preparation, the situation is even better.
Tax professionals such as Hall Accounting Company will ask the right questions and help you gather all the information and documentation you need to file your return correctly. For this reason, it is advisable to use a CPA to file your tax return from the start, especially if you have complicated tax matters that you need help attending to.
IRS Representation
If an error on your original returns leads to an IRS inquiry or audit, having a CPA on your side becomes invaluable. Many CPAs offer tax resolution services and can represent you in dealing with the IRS, handling all communication, and ensuring the best possible outcome.
Worried about dealing with the IRS? Hall Accounting Company can help you navigate IRS audits, questions, and penalty appeals. Get peace of mind today.
Proactive tax planning
CPAs don’t just amend returns - they help you plan for the future. Tax planning services in Dallas are designed to help you maximize deductions before the end of the tax year, giving you the best chance of reducing your tax liability. If you’ve found yourself needing an amended tax return once, the best course of action will be to work with a CPA to avoid mistakes in the future. If you’re interested in getting ahead with high quality taxation advice and assistance, you can book your consultation now.
Concluding words
The rate a CPA will charge for an amended tax return depends entirely on the amount of work required to fix the errors and resubmit the return. This work may involve loading your tax information onto an accounting system from scratch if you’re a new client, in which case the CPA will give you a service-specific quote. Other factors that influence cost are location and state-specific regulations.
The cost of most adjustments start with a baseline rate that can increase if the amendment becomes more complex. Each accounting firm will provide a customized quote for the work that you want done, but lock the cost down to a completed outcome, if you can because this will prevent surprises.
_________________________________________________________________
We don’t like surprising our clients with additional fees. Use our taxation calculator for a quick and accurate quote.