Are accounting fees tax deductible?

If you are self-employed and pay a tax preparer to complete your Form 1040 income tax return, make sure that you get an itemized bill showing the portion of the tax preparation fee allocated to preparing your Schedule C (and any other business tax forms attached to your Form 1040).

While tax preparation fees can't be deducted from personal taxes, they are considered an "ordinary and necessary" expense for business owners. This means that if you are self-employed, you can deduct your tax preparation fees under your business expenses, at least through the year 2025 if Congress does not renew the TCJA.

Specifically, those eligible include:

• Sole proprietorships who fill out and file Schedule C for Form 1040 or 1040-R which allows you to report income or losses from businesses you operated as a sole proprietor;

• Business owners whose businesses are classified as partnerships, limited liability corporations, or S corporations;

• Farmers who file Schedule F which reports income earned from agricultural activities;

• Individuals receiving income from rental properties, royalties, or other income reported when filing Schedule E;

Independent contractors and statutory employees (independent contractors who are classified as employees for tax withholding purposes) may also deduct tax preparation fees. This includes;

• Food and beverage delivery drivers who are paid on commission (such as working for DoorDash or InstaCart);

• Full-time traveling or local salespeople who get paid solely on commission

• Life insurance agents;

• Freelance workers, such as graphic designers.