Tax Tip: Deduct Tax Preparation Fees

Editor's Note: This article is part of our 2013 Tax Tips series. Robert Flach is an expert with almost 40 years of experience as a tax professional and also blogs as The Wandering Tax Pro.

NEW YORK (MainStreet) —Thanks to the growing complexity of the Tax Code, it is estimated that each year more than 60% of taxpayers use a paid preparer to complete their federal and state income tax returns.

The IRS tells us “expenses paid or incurred by a taxpayer for tax counsel or expenses paid or incurred in connection with the preparation of his tax returns or in connection with any proceedings involved in determining the extent of his tax liability or in contesting his tax liability are deductible.” This is true “whether the taxing authority be Federal, State, or municipal, and whether the tax be income, estate, gift, property or any other tax.”

The fee you pay your tax professional to prepare your returns is deductible as a Miscellaneous Expense on Schedule A, subject to the 2% of AGI exclusion.

You can also deduct round-trip travel to your tax pro’s office, at 55.5 cents per mile for 2012 and 56.5 cents per mile for 2013, or the cost of postage if to mail your tax “stuff” to your preparer, as many of my clients do.

Even if you prepare your own returns you can deduct -

  • the cost of making photocopies of your returns
  • postage for mailing your returns, including extra charges for return-receipt or overnight delivery
  • electronic filing fees and any convenience fees charged when paying the tax you owe electronically with a credit or debit card, and
  • the cost of tax preparation software packages - although I do not recommend using tax preparation software to prepare your return as a substitute to going to a qualified professional.
Show Comments