How to Claim Tax Relief on Professional Fees
Whether you are an employee for a company or self-employed, you may be eligible to claim tax relief for your professional fees. The key is to demonstrate that the fees are a necessary part of performing your job. It is also important to document your expenses and to claim the expenses properly on your federal income tax return. Follow these helpful guidelines.
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Instructions
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Gather your receipts and/or canceled checks, credit card statements or other proof of payment for each professional fee you wish to claim for tax relief. The receipts should be for the previous calendar year. If the fee is not based on a calendar year, the claim for tax relief should be made for the calendar year during which the fee was paid. This step applies to employees and self-employed workers.
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Ask your employer, supervisor or human resources department for a job description if you are an employee for a company. If you cannot obtain a job description, collect memos, letters or other documents describing your duties. These documents will provide documentation to prove the necessity of the professional fee to perform your job.
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If you are self-employed, write a summary description of your company which demonstrates the necessity of the professional fee(s) that you are claiming. If you have a professional website, include the URL in the description. If you are a member of a licensed profession, include a brochure or other literature from that organization which includes a mention of the requirement for the particular professional fee.
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File your claim for tax relief for your professional fee(s) on your federal income tax return. Depending on your particular circumstances, you will either use Schedule A for form 1040, Form 2106 or Form 2106-EZ to claim the deduction. There are specific requirements which determine which form should be used. See the Resources section for a link.
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Tips & Warnings
As a business-related expense, professional fees are usually subject to the 2 percent limitation, which means that only those expenses which exceed 2 percent of gross annual income may be deducted.
If your professional fees are partially reimbursed by an employer, only the portion of the fee(s) which are not reimbursed may be deducted. Political lobbying fees and related expenses are generally not considered deductible.
