With tax season just around the corner, many are gearing up for the tax prep season. While some may choose to prepare their taxes on their own, many choose to have professional tax preparation services instead. There are several reasons one may elect to have a tax professional prepare their taxes, ranging from complexities in their tax prep, to time constraints, to just frankly not wanting to it themselves. With that being said, we receive many questions regarding whether or not individuals can deduct tax preparation and associated fees. While this appears to be a simple yes/no question, it is actually slightly more complicated.
Let’s start with the changes made to the US tax system last year. President Trump signed the tax reform into law, making major revisions to the U.S. tax code for both individuals and corporations. These represent the most significant tax revisions made in the United States in more than 30 years. These revisions include new tax brackets, corporate tax changes, and modified deductions and credits.
Unfortunately, many deductions will be disappearing due to the 2018 Tax Reform, including:
Tax preparation fees will no longer be deductible from your taxes. However, as mentioned, it isn’t quite that simple.
Individuals who are self-employed can still deduct tax-prep fees (at least for the time-being) under the rules of the new tax reform. However, if a self-employed person is also working a part-time/salaried job, they may not be eligible to deduct these fees.
While this may be frustrating to many, keep in mind that actually being eligible to deduct your tax preparation fees under the old tax code would have been highly unlikely. In order to be eligible, these tax prep fees would have to had to be 2% of your adjusted gross income (AGI). So for example, if your AGI was $70,000, those tax fees would have to exceed $1,400 in order to be eligible, which is far more than what the typical tax preparation fees would cost.
Work with a diligent, experienced CPA to make sure the fees you pay are worth it. We take extra precaution to protect our clients’ information, providing an additional layer of security in the fight against identity theft. To minimize your risk of identity theft and maximize your refund, submit our online contact form or call our Raleigh accounting firm today at 919-420-0092.
