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Can you write off are tax preparation fees deductible?

TL;DR

Tax preparation fees are not deductible for individuals under the current tax law, but they may be deductible for businesses if they are directly related to the business operations.

Detailed Answer

For individuals, tax preparation fees were deductible as a miscellaneous itemized deduction subject to the 2% AGI floor under the old tax law. However, the Tax Cuts and Jobs Act of 2017 suspended this deduction for tax years 2018 through 2025. For businesses, including freelancers and independent contractors, tax preparation fees can be deducted if they are directly related to the business. This includes fees for preparing the business portion of your tax return, such as Schedule C for sole proprietors or Schedule E for rental properties. It's important to allocate the fees between personal and business services if both are provided.

Where to Put It on the Tax Form

Schedule C, Line 17 (Legal and Professional Services) for sole proprietors. For partnerships and corporations, it would be on the relevant business tax return form.

Real World Example

A freelance graphic designer pays $600 to a tax professional to prepare their tax return. The professional charges $400 for the business portion (Schedule C) and $200 for the personal portion. The designer can deduct the $400 on Schedule C, Line 17 as a business expense.

Audit Risk & Documentation Tips

Audit risk is moderate. To defend this deduction, keep detailed invoices from your tax preparer that clearly separate business and personal charges. Maintain records of payment, such as canceled checks or credit card statements, and any correspondence with your tax preparer that outlines the services provided.

IRS Reference

IRS Publication 535, Business Expenses.

Relevant Industries

FreelancersConsultantsSmall Business OwnersIndependent Contractors

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Disclaimer: This is for informational purposes only and should not be construed as tax or legal advice. Always consult your tax advisor.

Page created on July 15, 2025

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