Tax Tip: Deduct Tax Prep Expenses


NEW YORK (MainStreet) — It is estimated that each year more than 60% of taxpayers use a paid preparer to complete their federal and state income tax returns.

According to the IRS, “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.”

The fee you pay your tax professional to prepare your returns is deductible as a Miscellaneous Expense on Schedule A. So is your round-trip travel to the tax pro’s office, at 50 cents per mile, or, if you mail your tax “stuff” to your preparer as many of my clients do, the cost of postage.

You can also deduct the cost of electronic filing and convenience fees charged when paying the tax you owe electronically by credit or debit card.

And, while I do not recommend using tax preparation software to prepare your return as a substitute for going to a qualified professional, you can deduct the cost of tax preparation software packages.

For all the latest tax tips as you prepare your 2010 returns, check out MainStreet's Tax Center, updated daily!

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