How Long Does it Take to do Taxes?

Filing income taxes is much more involved than filling out a couple of forms and submitting them. Record keeping and maintenance, planning, form submission, and other tax-related activities can take substantial time, depending on your unique situation. Business filers typically spend the most time on tax-related activities, while those who file a short 1040 form spend the least.

Find out more details about how long it takes to file taxes, time-saving methods, as well as how to tell when the services of an accountant can save you time, money, and frustration.

What Are the Typical Times for Filing Different Types of Taxes?

tax forms on a table with a notebook and calculator
Image via Flickr by wuestenigel

Times for filing, and all the related steps before it, vary depending on the type of taxes filed and other variables like whether you itemize deductions. Individual filers spend less time and money on taxes and related bookkeeping activities than business owners due to reduced complexity. Even for single filers, the tax code has become more complex over the years, so the averages have ticked upward in the last few years.

Individual Taxes

Individual taxpayers filing a 1040X can expect to spend 10 hours and $160 on filing taxes each year on average. According to the IRS, this includes all related forms and schedules across all types of tax preparation. Expenses include tax return preparation and submission fees, postage and copying, and any software expenses. Time and cost vary and may be substantially less for those who file a 1040-EZ short form. The average cost for the 1040-EZ is $40, the 1040-A is $80, and the 1040 is $260.

The simplest form, the 1040-EZ, is only 14 lines long but only applies to 12% of taxpayers since it requires them to be under age 65, earn less than $100,000, and not claim any adjustments to income or tax credits besides earned income credit. Individuals under age 65 with an adjusted gross income of over $12,400 need to file taxes, but this figure is subject to change each year.

Business Taxes

Business filers spend an average of 24 hours, about half of which is recordkeeping. Business returns include those who have income from freelance work, rental property, and other endeavors. Business taxes have a wide range of complexity, as self-employed taxpayers must file if they had a net income of $400 or more. Business filers pay an average of $410, but costs vary widely depending on the complexity, size, and type of business.

Business taxes can exceed 80 hours for small business owners, who face increasing administrative burdens that result in more time and money spent devoted to taxes. Launching a new business creates big changes in taxes and subjects filers to scrutiny over recordkeeping and deductions. New businesses can claim startup costs but have taxable income even if it is reinvested in growing the business. Business owners also pay self-employment tax, which contributes additional money to Social Security and Medicare. Some business owners choose to operate as a corporation, eliminating self-employment taxes but requires owners to handle payroll taxes.

How Can I do My Taxes Quicker?

Recordkeeping and filing times may take more hours than expected, but there are ways to make tax time more efficient when it comes to time and money. The best way to reduce time is a year-round goal of keeping your records organized and accurate at all times. Keep tax-related documentation like receipts in one location and categorized in a way that makes the most sense when the documents are needed. Organize new documents and materials as they arrive and keep a running tally of current dollar amounts and types of documents filed.

Keep a list of the tax forms you need, calling attention to required forms that may be late or ones that require downloading and printing. Sometimes investment companies and others are late sending tax documents, or a document was misplaced, but it is becoming increasingly convenient to access the needed information online.

Tax preparation software saves time and improves accuracy by flagging errors and helping you do the calculations. The software cost can be justified by the peace of mind that the process has quality checks, streamlined steps, and higher accuracy. For those with complex situations or who don’t feel comfortable dealing with taxes, a professional tax preparer may be the most cost- and time-efficient way to get taxes filed accurately and maximize deductions. A tax professional will know the ins and outs of evolving tax laws and find the best way to file your taxes.

When To Use a Professional Tax Filing Service

Hiring a tax professional to prepare your taxes and handle other tax-related bookkeeping is a decision that revolves around your comfort with managing your taxes and how you justify the expense of having a tax preparer. If handling your taxes takes several hours, but hiring a tax preparer allows you to spend that time doing something else while saving time and frustration, it may be worth it.

Tax professionals will also have a higher degree of accuracy and will be able to provide advice and find tax breaks and other savings. The time and money savings a tax professional can provide may easily cover the cost of hiring a professional. Taxpayers, especially those with business income or unique circumstances, will also have more peace of mind.

A top tip for saving time, keeping accurate records throughout the year, also applies to taxes that are submitted to a professional preparer. Accurate and comprehensive records given to your tax preparer will save time and money, ensuring you receive the best tax rate as well as protecting you from the scrutiny of an IRS audit.

Our Team Can Help

Our tax professionals can navigate the complex laws and regulations, as well as your unique tax situation. Pasquesi Shepard staff will help you decide what needs to be included in your tax return and what isn’t necessary. We can review your current and future tax return needs, helping you prepare for filing and avoid audits while meeting financial goals.

If you have questions about filing taxes or the steps involved in recordkeeping throughout the year, please contact us. We will be happy to ensure you properly file all forms and take advantage of tax laws that minimize your taxes owed.