Are tax preparation fees deductible?

Until 2018, when Donald Trump’s Tax Cuts and Jobs Act (TCJA) went into effect, all taxpayers could deduct tax preparation fees from their taxes if they used itemized deductions. However, the TCJA eliminated this deduction for most people. 

Today, you can only deduct tax preparation fees if you are self-employed. The TCJA ends in 2025, although it could be renewed. You are considered self-employed if you’re a contractor, freelancer, or small business owner.

If you are self-employed, you can deduct the following crypto tax preparation expenses:

How to claim a tax preparation fee deduction

Here are five simple steps to claim a tax preparation fee deduction if you qualify.

1. Identify your filing status

   Confirm that you fall under the self-employed category, including contractors, freelancers, or small business owners, making you eligible for tax preparation fee deductions.

2. Navigate to Schedule C

   If using paper forms, locate and fill out Schedule C, specifically focusing on the section dedicated to legal and professional fees.

3. Calculate total tax preparation expenses

   Sum up the costs associated with tax preparation, including expenses for crypto tax software, fees paid to tax professionals, and any charges related to e-filing.

4. Enter the amount on Schedule C

   In the legal and professional fees section of Schedule C, input the total amount of your tax preparation expenses. This is a crucial step in ensuring accurate deduction of these costs.

5. Submit your forms

   Once you’ve completed Schedule C, submit your paper forms along with the rest of your tax documents.

When in doubt, consult with a crypto tax professional like ours at TokenTax to get clarity about this and all your crypto tax filing questions.