Many people have questions about the best way to prepare their taxes every year when April rolls around. You may also handle taxes on your own. For expert help and convenience, you may turn to a tax professional when preparing your tax returns. You may ask: are tax preparation fees deductible?
Generally, tax prep fees are no longer deductible for most people. However, you can get preparation fees deductions if you operate your own business. You can find out more about this aspect of the tax code with outsourced accounting services in Lombard, IL. Call Accounting & Tax Advisers CPAs at (630) 932-9600 for tax preparation help.
Restrictions on Tax Prep Fee Deductions
In the past, more people could use a tax preparation deduction on their taxes. However, the Tax Cuts and Jobs Act (TCJA) changed that in 2017. The TCJA raised the standard deduction for most people. However, it also removed many previous deductions, including the tax prep fee deduction.
So, are tax preparation fees deductible? Not for most people. However, the TCJA still allows some self-employed individuals to get a tax prep fee deductible. You can find more about the changes to the tax code with .
Qualifications for Tax Prep Fee Deductions
You can no longer deduct tax prep fees from your personal taxes in most cases. However, the government considers these fees to be expenses for businesses. Therefore, you can get a tax preparation fees deductible if you meet certain qualifications as a self-employed individual.
You may request the deduction if you:
- Work as a farmer and file a Schedule F form
- Operate a sole proprietorship and file Form 1040 or 1040-R correctly
You may also get the deduction if you file a Schedule E form to record income earned from:
- Partnerships
- S corporations
- Rental properties
- Estates
- Royalties
You may try to use tax preparation software to determine if you qualify for a tax prep fee deduction, but this often becomes very complicated. Turn to tax preparation professionals to ensure that you get all potential deductions, avoiding this potential tax problem.
Contractors and Tax Prep Fee Deductions
Some contractors also have the option to deduct their tax preparation fees. Individuals who deliver food and beverages, dry cleaning and delivery drivers, traveling salespeople, and agents who sell life insurance may file for this deduction.
You should know that you can only deduct fees that directly relate to handling your business taxes. You cannot deduct the cost to prepare your personal taxes. You must break up your taxable income to ensure that the deduction only applies to eligible funds.
Let a professional CPA handle your tax prep to ensure that you understand the breakdown for tax prep fee deductions.
Let Us Handle Your Tax Preparations
Are tax preparation fees deductible? In many cases, you cannot deduct your tax prep fees. However, you may qualify for a deduction if you work as a contractor or you are self-employed. Find out more about common small-business tax questions and problems by calling (630) 932-9600 to speak with Accounting & Tax Advisers CPAs.