Taxpayer asks:
Hello taxgirl,
I love your blog! My question is as follows:
I prepare taxes, so naturally I will prepare my own taxes. Can I deduct MY tax preparation fee (the fee I would charge someone else for a tax return with the same complexity)?
Thanks,
Taxgirl says:
Thanks for the nice words!
Unfortunately, I’m going to have to say no to your question. 🙁
The idea behind claiming most deductions is that there is generally a corresponding item of income (some exceptions exist but you get the idea). So when you pay someone to do your taxes, the preparer reports it as income, you claim it as a deduction. Voila! But when you self-prepare your taxes, whether or not you’re a professional, there’s no income component. So it makes sense that there would be no deduction.
On the plus side, you can claim a deduction for out-of-pocket expenses paid for tax preparation software, tax publications, and the costs associated with electronic filing. Those expenses, together with fees paid to a tax preparer in the year of the return (for example, fees paid in 2008 would be reported on your 2008 return) will be reported on Schedule A of your federal form 1040 as an itemized miscellaneous deduction. You have to itemize to take advantage of this deduction.
And yes, since I know some tax pro out there is gonna ask, if you paid yourself (though not sure why you’d do this), I’m thinking you could deduct it.
(Note: The TJCA eliminated the deduction for tax prep expenses for the years 2018-2025.)
Before you go: be sure to read my disclaimer. Remember, I’m a lawyer and we love disclaimers.
If you have a question, here’s how to Ask The Taxgirl.
Are you kidding me? I stumbled across this question while searching for something else. When this person says they “prepare taxes”, do they mean, like, professionally? I don’t know who they’re preparing taxes for, but if they’re asking whether or not they can take a deduction for time, I’m sure glad they’re not preparing my return. That’s income tax 101 stuff right there…
I know of someone who has been running a tax business out of her home for years. She charges her clients and uses Turbo Tax to file their taxes. However, she marks them as “self-prepared” and has the clients sign off as if they did it themselves. Is this legal? I am hesitant to use her tax service because it doesn’t seem right. What are the laws around running your own in-home tax business?
I took a picture of my w-2, so she can start on it. Later I was told, I don’t have to come to her office; my return is done. On my printout is “SELF-PREPARED.” Isn’t that fraudulent?
That doesn’t sound very above-board. I would not sign a return that you pay for if the preparer insists on treating it as self-prepared. It *sounds* like someone who doesn’t have the proper credentials (like a PTIN).