How long and how much does it cost to file a tax return?

How long and how much does it cost to file a tax return?

Every year, taxpayers are required to file their returns by completing and filing a version of Form 1040. A study conducted by the IRS regarding the time and money required to file this form reveals the following facts;

  • Form 1040 – Form 1040 is the most detailed of the tax return forms. 68% of taxpayers use Form 1040 to file their returns. On average, taxpayers who file Form 1040 take 22 hours to file it. Of those 22 hours, taxpayers use 10 hours for tax reporting, 3 hours for planning their taxes, 4 hours for completing the actual form, and 1 hour for filing the form. 3 hours are spent doing various tax-related activities, such as searching for information on the Internet. The survey also revealed that the average cost to file this form was $290.
  • Form 1040A – According to the same IRS survey, 19% of taxpayers use Form 1040A to file their returns. Those taxpayers who choose the easier Form 1040A will take an average of 10 hours to file the form. Time is broken down as follows; 4 hours for record keeping, 1 hour for tax planning, 3 hours for form completion, 1 hour for filing and 2 hours for other related activities. Filing a Form 1040A costs an average of $120.
  • Form 1040EZ – Form 1040EZ is the tax return form that takes the least time and is used by taxpayers who have less tax information. Only 13% of taxpayers choose this tax return form. According to IRS research, this form takes an average of 7 hours to complete. Of that time, 2 hours are used for filing tax-related records, 1 hour for tax planning, 2 hours for form completion, 1 hour for filing, and 1 hour for processing other related activities. According to the study, a taxpayer filing this Form 1040EZ will pay an average of $50 for the filing process.
  • Business and non-business – The IRS study also compared the time and costs spent on business and non-business tax returns. Generally, business tax returns are 1040 tax return forms that involve filing any of the C, E, F, and C-EZ sections of the form. They also include taxpayers who file Form 2106 and 2106-EZ. All other submitters are considered non-profit submitters. According to the study, business-related filing takes an average of 32 hours, with 16 hours spent on filing records, 4 hours on planning, 6 hours on form completion, 1 hour on filing, and 4 hours on handling other related tasks. On average, filing a business-related return costs $410. On the other hand, a non-profit return takes an average of 12 hours to complete. Of those 12 hours, 2 were spent on planning, 5 on record keeping, 3 on form completion, 1 on submission, and 1 hour on handling other related activities.

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