Are Tax Preparation Fees Deductible in 2019?

Tax Preparation Fee Deductions

Maybe. As an individual, if you own a business (Schedule C), have rental properties (Schedule E) or a farm (Schedule F or Form 4835), some or all of your tax preparation fees will be deductible on the applicable form included with your Form 1040.

Under the old tax law (2017 returns and before) an individual could deduct their tax preparation fees as a Miscellaneous Itemized Deduction on Schedule A. In order to get any benefit, your tax prep fees, along with your other Miscellaneous Itemized Deductions, had to exceed 2% of your Adjusted Gross Income. However, the Tax Cut and Jobs Act, effective for tax years 2018 and later, eliminated the ability to claim all miscellaneous itemized deductions.

Miscellaneous Itemized Deductions Publication 529

The issue of a tax preparation fee deduction is outlined in the Department of the Treasury Internal Revenue Service publication 529, Miscellaneous Deductions.

The IRS publication 529 can be seen at https://www.irs.gov/pub/irs-pdf/p529.pdf The latest revision as of this writing was December 2019, Cat.No. 150560. Remember,.for the most recent information about changes related to Pub. 529, such as legislation enacted after it was published, go to IRS.gov/Pub529, https://www.irs.gov/uac/About-Publication-529.

The publication details information on why most people can no longer claim any miscellaneous itemized deductions. Miscellaneous itemized deductions are allowed if you fall into one of the qualified categories of employment. Qualified categories of employment were claiming a deduction relating to unreimbursed employee expenses. Miscellaneous itemized deductions are those deductions that would have been subject to the 2% of adjusted gross income limitation. You can still claim certain expenses as itemized deductions on Schedule A (Form 1040, 1040-SR, or 1040-NR) or as an adjustment to income on Form 1040 or 1040-SR.

Publication 529 covers the topics.

•Deductions for Unreimbursed Employee Expenses.
•Expenses you can’t deduct
•Expenses you can deduct.
•How to report your deductions.

Tax Preparation Fee Deduction

As of December 2019, irs.gov – https://www.irs.gov/pub/irs-pdf/p529.pdf:

“Tax preparation fees on the return for the year in which you pay them are a miscellaneous itemized deduction and can no longer be deducted. These fees include the cost of tax preparation software programs and tax publications. They also include any fee you paid for electronic filing of your return.”

Remember:

When using tax deductions you must keep records to verify your deductions. You should keep receipts, canceled checks, substitute checks, financial account statements, and other documentary evidence.

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