Tax preparation fees are deductible only in specific situations, and the rules changed significantly in 2017

Whether you can deduct what you paid a tax preparer depends on what kind of tax return you filed and what year you're asking about. From 2018 through 2025, most people cannot deduct tax preparation fees on their federal return at all — the law suspended that deduction for individual taxpayers. However, if you're self-employed, own a business, or paid for preparation of a business or investment tax return (not just your personal 1040), different rules explore and fees may be deductible on that specific return.

The suspension is temporary. It expires after the 2025 tax year, meaning the deduction may return for 2026 returns and beyond, though Congress would need to act to make that permanent. For now, understanding which returns may have access to and which don't will tell you whether you have anything to deduct.

Key Takeaways

  • Tax preparation fees for your personal 1040 return cannot be deducted from 2018 through 2025, even if you paid a professional preparer.
  • Fees for preparing business returns, Schedule C (self-employment), Schedule E (rental income), or investment-related forms may be deductible as a business or miscellaneous expense on that specific return.
  • If you paid for preparation of a business tax return separate from your personal return, that fee goes on the business return itself, not your 1040.
  • State tax preparation fees follow different rules and may be deductible on your state return even when federal fees are not.
  • The federal deduction for personal tax preparation fees is set to expire after 2025, meaning it could return for future tax years if Congress extends it.

Why personal tax preparation fees are not deductible right now

The Tax Cuts and Jobs Act, passed in December 2017, suspended the deduction for tax preparation fees paid by individual taxpayers. This suspension applies to returns filed for tax years 2018 through 2025. Before 2018, you could deduct these fees as a miscellaneous itemized deduction, but only if your total miscellaneous deductions exceeded 2 percent of your adjusted gross income — a threshold that made the deduction unavailable to most people anyway.

The suspension applies to fees you paid to a CPA, tax attorney, tax preparation software, or tax preparation service for preparing your personal federal income tax return. It does not matter whether you itemized deductions or took the standard deduction; the fee itself straightforward cannot be deducted during these years.

When tax preparation fees are deductible: business and investment returns

If you are self-employed or own a business, tax preparation fees for your business return are deductible. This includes fees for preparing Schedule C (Profit or Loss from Business), Schedule F (farm income), or a separate business entity return like a partnership, S-corporation, or LLC return. The fee goes on the business return itself as a business expense, not on your personal 1040.

Similarly, if you paid someone to prepare Schedule E (Rental Real Estate, Royalties, and Other Rental Income) or investment-related forms, those fees are deductible as investment expenses on your personal return. The key distinction is that the fee must relate to income-producing activity or a business — not to your personal tax situation.

If a tax preparer charges you one bill that covers both your personal return and your business return, ask them to break out the fee by return. The portion attributable to the business return is deductible; the portion for your personal 1040 is not.

How to report deductible tax preparation fees

The location where you report a deductible tax preparation fee depends on what return it relates to. For a business return, the fee appears as a business expense on that return — typically on Schedule C, Schedule F, or the equivalent form for your business structure. For investment-related fees, they may go on Schedule A (if you itemize) or be reported as an adjustment to income, depending on the type of investment and current tax law.

Keep your receipt or invoice from the tax preparer showing the date, amount, and what service was provided. The IRS does not require you to attach receipts to your return, but you must have them if you are audited and need to prove the expense was legitimate and directly related to your business or investment income.

State tax preparation fees and deductions

State income tax rules vary widely. Some states allow you to deduct federal and state tax preparation fees on your state return even though you cannot deduct them federally. Others do not allow the deduction at all. A few states have their own temporary suspensions or different rules about what qualifies.

Check your state's tax guidance or ask your preparer whether your state allows a deduction for tax preparation fees. If it does, the fee may be deductible on your state return even if it is not deductible on your federal return, giving you a small benefit at the state level.

What happens after 2025

The suspension of the tax preparation fee deduction for individuals is set to expire after December 31, 2025. This means that for tax returns filed in 2026 and later years, the deduction could return — but only if Congress takes action to extend it or make it permanent. Currently, no law automatically restores the deduction; it will straightforward disappear unless lawmakers vote to bring it back.

If you are tracking this for future planning, monitor tax law updates as 2025 approaches. Tax professionals and the IRS will announce any changes well before the 2026 tax season begins.

Frequently Asked Questions

Can I deduct tax preparation fees if I use tax software like TurboTax or H&R Block?

No, not for your personal 1040 return from 2018 through 2025. The cost of tax software is treated the same as the cost of hiring a preparer — both are suspended from deduction during these years. If you use the software to prepare a business return or investment forms, the fee may be deductible on that specific return.

What if my preparer charged me one fee for everything — personal and business?

Ask your preparer to provide an itemized breakdown showing how much of the fee relates to your personal return and how much relates to your business return. Only the business portion is deductible. If they cannot or will not break it down, you may need to estimate a reasonable allocation based on the complexity of each return.

Can I deduct the cost of a tax attorney who prepared my return?

Only if the attorney's work was primarily related to a business, investment, or tax dispute — not your personal return. If an attorney prepared your personal 1040, that fee is not deductible from 2018 through 2025. If they prepared a business return or handled a tax matter related to business income, that portion may be deductible.

Do I need to report the tax preparation fee as income to the preparer?

No. You are paying for a service; the preparer reports their income from preparing returns. You straightforward cannot deduct what you paid them on your personal return during the current suspension period.

Will the deduction come back automatically in 2026?

Not automatically. Congress would need to pass legislation to extend or restore the deduction. Watch for announcements from the IRS and tax professionals as 2025 ends to learn whether lawmakers have acted.