Are Business Tax Services Tax Deductible?

Tax season comes with a slurry of questions, frustrations and points of friction. Business owners are tasked with enough within the day-to-day operations of their companies — tax preparation and managing the IRS just add to the stress and workload. This is why so many (rightfully) choose to outsource their tax services to firms like Froehling Anderson.

However, these preparation services can’t come cost-free, so many business owners wonder: is there a way to deduct tax services? In this article, we’ll explore the answer to that question.

On the personal side, the Tax Cuts and Jobs Act that passed in 2017 eliminated many itemized deductions like medical costs, unreimbursed work expenses, moving expenses, theft losses and costs from preparing your own tax returns.

For businesses, tax services are considered an “ordinary and necessary expense” for business owners. This means that, generally speaking, businesses cannot deduct tax services. However, there are exceptions. If you are self-employed, you may be able to still claim a deduction for tax preparation fees for 2018 through 2025. To qualify, you must own a business as a sole proprietor and can claim it on Schedule C.

While tax services are not deductible, they are worth the cost. Hiring an experienced tax accountant ensures compliance and accuracy, so you don’t have to worry about any future audits. Additionally, the time investment of filing business taxes is massive. Outsourcing that time to an expert frees up your time so that you can focus on your business.

Froehling Anderson offers a wide range of outsourced CPA services for your business. From tax, business advising, audits and much more, we make sure your business is running optimally and in compliance. To guide your company’s financial future, we can help with outsourcing work anywhere from basic bookkeeping to CFO services.