What's deductible?
- CPA or accountant fees for business tax preparation
- Bookkeeping services
- Legal fees for business contracts, entity formation, intellectual property
- Business consulting fees
- Tax planning and advisory services related to your business
- Payroll processing fees
What's NOT deductible?
Since the Tax Cuts and Jobs Act (2018), personal tax preparation fees are no longer deductible. This means:
- Fees for your personal 1040 return: not deductible
- Fees for your Schedule C (business): deductible
- If your CPA charges one fee for both, ask them to split the invoice
Personal legal fees (divorce, estate planning, personal injury) are also not deductible.
Example
Your CPA charges $2,000 for your tax return. They break it down:
- Schedule C preparation: $800 (deductible on Schedule C)
- Personal 1040 preparation: $1,200 (not deductible)
Ask your CPA for a split invoice every year.
IRS Reference
See IRS Publication 535 (Business Expenses), Chapter 7. Report on Schedule C, Line 17 (Legal and professional services).
See IRS Publication 535 (Business Expenses), Chapter 7. Report on Schedule C, Line 17 (Legal and professional services).
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