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Key takeaways:
- If you own a business or work for yourself, you can write off tax preparation fees as a business expense.
- You can’t deduct personal tax preparation fees. But business tax returns, like Schedule C, E, or F, are fair game.
- Monthly or quarterly payments for ongoing services, like bookkeeping or financial advice, can be deducted as professional services. Just not as tax preparation.
- Bench can get your books ready for tax season, help you find deductions you might have overlooked, and can even handle the filing for you.
Can I deduct tax preparation fees?
If you’re a W-2 employee, sorry—since the Tax Cuts and Jobs Act passed in 2017, personal tax preparation fees can’t be deducted anymore. The law is set to expire in 2025 unless the next administration extends it, but until then, you're out of luck.
However, if you operate a business or are self-employed, you can still claim tax preparation fees as a business expense. So, while the standard deduction increased, many itemized deductions (e.g., tax preparation fees for personal returns) were cut. Your business deductions, on the other hand, can still be considered.
Next, we look at which businesses can claim their tax preparation fees and if you fall into one of those categories.
Which businesses can write off tax preparation fees?
The IRS considers tax preparation an ordinary and necessary business expense, making it eligible for deductions for certain businesses.
Here’s who can qualify:
- Sole proprietors can claim them on Schedule C
- Independent contractors (statutory employees) can claim them on Schedule C
- Business owners running partnerships, LLCs, or S corporations
- Landlords earning rental income and filing Schedule E
- Individuals receiving royalties and filing Schedule E
- Farmers filing Schedule F
- Independent contractors, such as:
- Freelancers (writers, videographers, etc.)
- Life insurance agents
- Delivery drivers for food and beverages who earn their keep through commissions (think DoorDash or Uber Eats)
- Sales professionals who make their income entirely from commissions
If you’re curious whether you can deduct tax preparation fees from both your federal and state taxes, the good news is you can do both. Just be sure to check with a tax professional, like a CPA or accountant, for the details about your specific state.
Now, let’s go into the kinds of fees your business can deduct.
Specific fees your business can deduct
When it comes to deducting tax preparation fees, the rules can depend on your business structure. Generally, these are some common expenses you can claim:
- Fees paid to tax pros for preparing your return and any consultations
- Legal fees related to tax issues (but not personal ones)
- If you’ve had to hire help for an audit
- Software programs you use to file your business taxes
- Costs for electronically filing your return, including credit card processing fees
Remember, only the portion of your tax preparation fees related to your business—like preparing forms such as Schedule C, E, or F—is deductible. Any costs of preparing personal tax returns, standard tax deductions, or tax credits are off the table.
Are accountant and CPA fees tax deductible?
Yes, accountant and CPA fees are deductible if it's tied to your business. For example, if you hire a tax professional to set up your books, file your business tax return, or give tax advice, you can claim these costs as business expenses.
But here’s the catch: If you’re paying your accountant or CPA a monthly or quarterly fee for ongoing services like bookkeeping, financial planning, or general advice, those fall under professional services deductions, not tax preparation. Still, they’re fully deductible.
Instead, tax preparation fees specifically cover the preparation of your business tax return and related services (like consultations or e-filing fees). If your tax preparer handles both, you’ll want an itemized list to separate the tax preparation portion from other professional services so you can deduct the right amount.
How much does tax preparation cost?
Your actual costs will depend on several factors—where you live, if you had a tricky tax year, and the level of expertise you need. On average, here’s what you can expect to pay, according to the National Society of Accountants:
- A CPA charges about $220 for a standard Form 1040 (no itemizing)
- If you’re itemizing deductions, the fee jumps to around $323
- For corporate tax returns (Form 1120), the average cost is around $913
- Self-employed individuals filing a Schedule C can pay about $192
- If you’re itemizing deductions on top of a Schedule C, the cost could go up to $515
Keep in mind that these are just averages. Always ask upfront what’s included in the fee, as extra forms or e-filing might cost more. If you’re looking for a more affordable option, Bench has you covered. While our fees don’t fall under the “tax preparation” category, they are 100% deductible as business expenses. Plus, we keep your books tax-ready all year long so that you can avoid last-minute surprises.
Here’s how Bench pricing stacks up to other tax preparation services:
- Pilot’s tax filing starts at $2,450
- QuickBooks Live starts at $1,749 (federal filing only)
- CPAs and accountants can range from $150 to $400 per hour
Further reading: How Much Does it Cost to File Taxes?
Make tax preparation easier with Bench
Tax preparation doesn’t have to be a confusing and complicated time for business owners. With Bench’s year-round bookkeeping service, your tax preparer will have up-to-date, tax-ready financials when it’s time to file. Through our Bookkeeping and Tax plan, we can handle everything—tax planning, preparation, and filing. And don't forget, it's 100 percent deductible.
So, with unlimited tax advisory support, there are no surprise fees or last-minute stress. Just reliable, expert help so you can stay focused on running your business.
