Are Tax Preparation Fees Deductible
ARE TAX PREPARATION FEES DEDUCTIBLE?
The time of tax can bring out the worst in people, and it’s not because they may end up owing IRS, but the process of preparing a return is quite intimidating. You can imagine those forms, the maths, the figures, the facts, and checking them over and over again.
Why not sure hire an expert to help prepare your taxes for you? You can pass on that job to someone who cannot be tired of tackling it. It definitely will cost money, but it doesn’t have to impediment because the cost of getting an expert to prepare your tax is deductible.
Which Preparation Fee Can Be Deducted?
Your preparation fee deduction is not limited to the cost related to having an expert prepare your return. Other common and related tax expenses such as tax planning advice and guidance in a tax-related audit, tax software, and criminal researches can also be deducted.
If it has to do with taxes and you can afford to pay some to help you, it’s almost time deductible. Below are a few examples;
- Legal advisors on tax problems and issues.
- Fees for presentation in a tax audit.
- The fees of tax-related books and several other editions.
- Fees for formulating a tax return.
- Advice and guidance on tax planning.
- The expense of tax preparation software.
- Fees for presentation on tax compilations.
HOW AND WHEN TO DEDUCT A TAX PREPARATION FEES?
Let’s assume you hire an expert for some other reasons, and you’re preparing your return, you must know how to claim the deduction. You must deduct fees for expert tax advice and guidance in the same year you make payment. If you hire an expert for advice and guidance that’s related to your 2017 return in 2018, you would have to claim the deduction on your 2018 return if that is when you made payment to them.
That means that you can deduct expert tax preparation fees in the following places below on a personal return.
- Tax preparation fees that are related to preparing a sole proprietor’s Schedule C are meant to be deducted on Schedule C on the line for the expert and legal fees.
- Tax preparation fees that are related to preparing Schedule E for rental expenses and income are meant to be deducted on Schedule E on the line for the expert and legal fees.
- Tax preparation fees that are related to preparing Schedule F for farm expenses and income are meant to be deducted on Schedule F under the category for other expenses.
- The tax preparation fee that’s connected to several other tax returns should be deducted on Schedule A on the line as a miscellaneous deduction.
It’s important to note that you must itemize to claim this deduction if you are not into farming, or not a landlord or not self-employed. So you have a choice and a decision to make, and it’s either you claim the ideal dedication for your status, or you can itemize. You cannot do both.
Itemizing means adding up all of your deductible expenses for the tax year, and your tax preparation fee is one of them. When you’re done adding up, the overall total should be more than the basic deduction, or else you’ll IRS more than you thought.