A tax accountant may be an excellent choice to minimize payments and save time on personal and business taxes. If the cost of preparing tax returns is a concern, you may wonder if you can deduct those costs. Let us learn more about accountant fees and any tax deductions it might offer. Also, check out Beem Tax Calculator to get a quick and accurate estimate of your federal and state tax refund for free.
Are Accountant Fees Tax-Deductible?
No, accountant fees are not tax deductible for most people. However, you can deduct taxes if you are self-employed or a statutory employee.
| Taxpayer | Deductible Fees | Non-Deductible Fees |
|---|---|---|
| Businesses | Fees for business tax prep, bookkeeping, payroll, financial consultations, audits | Personal tax return prep fees |
| Individuals | Investment-related fees (subject to limitations), employment-related fees (self-employed/contractors), disaster-related tax prep fees | Personal tax return prep fees, general financial advice |
Who Can Still Deduct Tax Preparation Fees?
Self-employed individuals can only claim tax preparation fees as deductions from 2018 through 2025. Schedule C permits statutory employees to claim this expense as well. Statutory employees are considered independent contractors but can be treated as employees for tax purposes. These include:
- Commission-paying drivers who deliver other food products or beverages besides milk
- An individual who picks up or delivers dry cleaning or laundry for a commission
- Salespeople who work full-time as traveling or local salespeople
- Remote workers whose employers dictate their tasks and provide their equipment
- A life insurance sales agent
What Portion of Fees Is Deductible?
Your next challenge is determining what part of your tax preparation fees can be deducted. According to IRS policy, the following expenses are covered:
- Including both meetings and preparation costs, accountants or tax preparers charge fees
- Software costs for tax preparation
- Charges incurred for e-filing, including credit card fees
How to Claim a Deduction for Tax Preparation Fees
You can deduct tax preparation fees on Schedules C, F, and E because they are considered “ordinary and necessary” to your business’s operation.
Claiming the Deduction on Schedule C
Business expenses and income are reported on Schedule C, completed by self-employed individuals, sole proprietors, and sole members of limited liability companies.
Claiming the Deduction on Schedule F
There are deductions for seeds, fertilizer, equipment maintenance, property taxes, farming-related credits, and deductions on Schedule F.
Claiming the Deduction on Schedule E
Schedule E reports income or loss from rental properties, royalties, partnerships, S corporations, estates, trusts, and residual interests in REMICs. If you have any income or loss from one or more of these sources, you can attach them using the same format as Schedule E.
Deducting Tax Preparation Fees on Personal Taxes
Your tax preparation fee cannot be deducted as an employee if you receive a W-2. The 2017 act stops most people from tax deductions, including medical expenses, unreimbursed work expenses, moving costs, theft losses, and preparing your tax return.
Despite losing many itemized deductions, the legislation increased the standard deduction, so most people ended up ahead. Since to deduct these fees, they had to exceed two percent of your adjusted gross income.
Deducting Business Tax Preparation Fees
Depending on your circumstances, you may be able to deduct the following expenses as a business owner or independent contractor:
- The software you use to prepare your taxes,
- E-filing fees;
- An accountant’s or tax professional’s charges for preparing your return and consulting you;
- Fees for legal representation and audit representation.
Can I deduct accounting fees on my tax return?
No, you generally cannot deduct accounting fees on your personal tax return in the US as of 2024.
Can you write off an accountant?
No, you cannot directly “write off” an accountant in the sense of claiming their fees as a direct deduction on your personal tax return in the US, as of 2024.
However, there might be some situations where you can deduct accounting fees indirectly:
- Self-employed Individuals and Business Owners: If you’re self-employed or own a business, you can typically deduct reasonable accounting fees as a business expense.
- Tax Dispute with the IRS: If you pay accounting fees to resolve a tax dispute with the IRS, you may be able to deduct those fees as miscellaneous itemized deductions.
But, directly claiming an accountant as a “write-off” on your personal return isn’t generally allowed.
| Situation | Deductible? | Notes |
|---|---|---|
| Individual Filer | No | Unless related to a tax dispute with the IRS |
| Self-Employed Individual or Business Owner | Yes | Must be ordinary and necessary for the business |
| Tax Dispute with the IRS | Yes | May be deductible as miscellaneous itemized deductions |
Conclusion
Most people need clarification on taxes and seek professional help during tax season. A professional accountant can provide deductions, apply for returns, and help them save tons of money while filing taxes. Use Beem to file your income taxes at the best price and get the Maximum Refund.
They understand the right strategy to file taxes and are on time, along with accurate data. It saves significant money and time and helps people minimize their bills. Even if they are not tax-deductible, hiring an accountant for your taxes is better.
FAQs
In the USA, are accounting fees tax deductible?
Any accounting services you pay for your company are deductible as a legitimate business expenditure. For instance, costs are associated with hiring an accountant to set up or maintain your company’s accounts, file your tax return, or provide tax guidance.
What is an itemized deduction for miscellaneous expenses?
Which costs you can include on Schedule A of Form 1040 or Form 1040NR as miscellaneous itemized deductions are explained in IRS Publication 529. The itemized deductions classified as miscellaneous include being subject to the 2% of adjusted gross income cap.
What kind of cost are accounting fees?
Accounting fees, however, are most frequently associated with three types of expenses: operational, administrative, and professional.
