Can I claim tax prep fees as a deduction?

Modified on Sun, 05 Feb 2023 at 08:25 PM

While individuals can no longer deduct tax preparation fees from their federal tax returns, self-employed and business owners may be able to deduct these expenses. A provision in the Tax Cuts and Jobs Act (TCJA) prevents individuals from deducting tax preparation fees through 2025.

If you make self-employment income, however, you may be able to deduct tax preparation fees — which include online tax software, hiring an accountant, or e-filing fees — from your tax return. You’ll need to claim this expense for the same tax year that you pay them. So, if you pay to file your 2022 taxes in 2023, you’ll report this expense on your 2023 taxes that you file in 2024.

You can only claim the portion of the expense related to your business costs, however. So if you have a full-time salaried, W-2 position, you can’t deduct the costs of this part of your tax return, but can deduct the costs of your self-employment taxes. To figure out this amount, you can ask you accountant to itemize your bill or calculate the approximate charge for your taxes. If filing online, you can determine the difference in pricing plans for self-employed versus the individual tax plan you would have otherwise purchased.

You can claim these expenses by filing Schedule C, under legal and professional fees.

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