How to Deduct Tax Prep Fees

Fees incurred for tax preparation are deductible.

Tax deductions reduce gross taxable income. Deductions are beneficial to taxpayers because they can push recognized income down to lower tax brackets and reduce tax liability. Taxpayers who incur fees from tax preparation can deduct those fees. The amount of the deduction may be small; however, that small deduction can move a taxpayer down one or two tax brackets and thus save money.

Things You'll Need

• Calculator

Instructions

1. Write down all tax preparation fees, including tax preparation software, private accountants and CPA charges, tax preparation franchise fees, e-File fees and appraisals (for theft and casualty loss deductions).

2. Add all of the fees on your calculator to arrive at one sum, in whole dollar amounts.

3. Input the dollar amount on Line 22 of Schedule A, if you are preparing your own taxes on paper. If you are using tax preparation software, then find the category under Deductions, sometimes called Credits and Deductions, and enter the dollar amount in the section labeled "Tax Preparation Fees." If you are using an accountant or CPA, provide the calculations and supporting documents to him.

Tips & Warnings

• Deduct tax preparation fees in the same year that taxes are prepared; you do not have to defer the deduction to the following year.

References

• Bankrate.com: Taking advantage of miscellaneous deductions--"Tax preparation fees" (Pages 1 and 2)
• Internal Revenue Service: Publication 17 (2009)--Your Federal Income Tax
• MainStreet: Daily Deduction: Tax Prepare Fees
• Investopedia: Deduction

Resources

• H&R Block: Tax Deductions
• Internal Revenue Service: 2009 Instructions for Schedule A (Form 1040)(2009)--"Introduction"