How to Deduct a Payment to My Tax Preparer

You can only deduct tax preparation fees with Form 1040.

The Internal Revenue Service classifies tax preparation fees as a miscellaneous income tax deduction. This means that you can deduct them if you itemize your deductions, but only the amount by which the tax preparation fees and any other itemized deductions exceeds 2 percent of your adjusted gross income. Other miscellaneous deductions include job expenses that your employer does not reimburse and safety deposit box fees. However, if you pay substantial tax preparation fees, it can save you money on your taxes.

Things You'll Need

• IRS Schedule A
• IRS Form 1040

Instructions

1. File your taxes with Form 1040 so that you can itemize your income tax deductions. If you do not itemize and give up the standard deduction, you cannot claim your payments to a tax preparer.

2. Enter the amount of your payment to your tax preparer on line 22.

3. Add the amount of your tax preparation fees to your other miscellaneous deductions, such as job education or union dues, and enter the total on line 24.

4. Enter your adjusted gross income from line 38 of your Form 1040 tax return on line 25. Multiply the adjusted gross income by 2 percent and report the result on line 27. For example, if your adjusted gross income equals $30,000, multiply $30,000 by 0.02 to get $600.

5. Subtract 2 percent of your adjusted gross income from your miscellaneous deductions, including your tax preparation fees, to calculate the deduction value and enter the result on line 27. For this example, if your total miscellaneous deductions equals $1,000, subtract $600 to get $400.

References

• Internal Revenue Service: Publication 529 - Miscellaneous Deductions
• Bankrate.com; Miscellaneous Tax Deductions; Kay Bell, 2011
• Internal Revenue Service: Schedule A Instructions

Resources

• Internal Revenue Service: Schedule A
• Internal Revenue Service: Form 1040