Posted by Peter J. Marchiano, Jr., CPA

Should You Take Tax Preparation Deductions

Should You Take Tax Preparation Deductions

A lot of people lose their cool during tax preparation season. The reason for this has a great deal to do with the intimidatingly large amount of forms and knowledge required to do it right. You'd think someone would find a way to make this process easier. Well, someone has and they are called tax preparation specialists. Although tax preparation deductions don't take the fear completely out of filing income tax returns, they do help.

Hire A Tax Preparations Specialist

There is no reason for anyone to stress over filing their income tax returns when professional tax preparation specialists are ready to help. It's true that these professionals charge for their services, but they are well worth the cost. Anyone who has attempted to fill out their own forms, especially when taking deductions, should understand the value added when a trained and experienced tax preparer gets involved. Most people find that they owe less than they thought and that justifies the fee.

Allowed Tax Preparation Deductions

Deductions for tax preparation is not just limited to the fee charged by tax prepares when they prepare returns, but that is a good start. Taxpayers can also use tax preparation deductions for things like getting tax planning advice from a professional or legal counsel for tax related issues. They can also take deductions for the purchase of tax preparation software or books and publications related to taxes. 

Business owners can also deduct tax preparation fees as a business expense. Taxpayers who find themselves caught up in criminal tax matters or need representation during tax audits or tax collections can deduct those expenses as well. 

Claiming Tax Preparation Deductions When And How

If you are preparing your own tax returns, it is important that you understand how and when you can claim deductions related to the cost of hiring professionals to help with any aspect of your taxes. Just like with any other deductions, you can only claim tax preparation deductions for the year the fees were paid. That means if you paid to have your tax return prepared for 2016 in 2017, then you can claim that fee on your 2017 tax return.

Miscellaneous Itemized Deduction

Taxpayers can choose to either itemize their deductions or use the standard deduction associated with their filing status, but not both. It is up to the individual to determine which is best for them and it can be a complicated process getting to the bottom of that.

Although itemizing things like tax preparation deductions, mortgage interest, work-related expenses, medical expenses and charitable contributions can be enticing, the only time it helps reduce the amount of taxes you owe is when the combination exceeds the standard deduction. 

It may help to remember that you will never be allowed to deduct 100 percent of your expenses since there are adjusted gross income thresholds that must be entered into the equation. 

As you can see, working your way through the various details of preparing your own taxes is a very intimidating process, and we have only scratched the surface. Most people, particularly business owners, understand how important it is to hire a professional tax preparer because that saves time and money while sparing their sanity.

Peter J. Marchiano, Jr., CPA
Contact This Member