So, you just paid someone to prepare your taxes (or maybe you’re about to), and now you’re wondering: Can I deduct this on my taxes? After all, it’s a business expense… right?
Great question. And the answer? It depends. But don’t worry, I’ll keep it simple.
The Bad News First
If you’re filing your personal taxes, your tax prep fees are NOT deductible anymore. The IRS took away this deduction in 2018 with the Tax Cuts and Jobs Act (TCJA). Before that, you could deduct them if you itemized, but now? No dice. Unless Congress changes the rules, this one’s off the table.
The Good News
If you own a business, things look better:
Self-employed? You can deduct tax prep fees as a business expense on your Schedule C.
Have a rental property? Tax prep costs related to that rental can go on Schedule E.
Partnership or Corporation? If you file a business return (Form 1065, 1120, or 1120S), your tax prep fees are deductible as a business expense.
What About State Taxes?
Some states still allow deductions for tax prep fees, even though the IRS doesn’t. It’s worth checking your state’s rules. Or having your tax pro do it for you.
The Takeaway
For personal taxes, tax prep fees are just an out-of-pocket cost. But if you’re running a business, there’s a good chance you can deduct them.
If you want to be smart about tax planning and avoid paying more than you should, we can help. Let’s chat.
