Tax preparation fees are deductible only for the part that relates to a business, rental or farm. The part for your personal return is not deductible for individuals under current federal law. So if you are self-employed, part of your accountant's bill or your tax software is a write-off, and the rest is not.
This guide covers where each part goes, how to split one bill, when you deduct it, and the Canadian rule. It describes US federal rules for the 2025 tax year, the return most people file in 2026.
Are tax preparation fees deductible? The short answer
The share of a tax preparation fee that relates to your business (Schedule C), rental (Schedule E) or farm (Schedule F) is deductible on that schedule; the share for your personal return is not deductible for individuals.
IRS Publication 529 (the current revision) says tax preparation fees on your return are a miscellaneous itemized deduction and can no longer be deducted, and that they include the cost of tax software, tax publications and electronic filing fees. That suspension originally ran from 2018 through 2025. P.L. 119-21, enacted in 2025, removed the end date, so IRC §67(h) now disallows miscellaneous itemized deductions for every tax year after 2017; under current law it did not return in 2026.
Self-employed: where the deduction goes
The IRS Instructions for Schedule C (2025) say to include on line 17, "Legal and professional services," fees for tax advice related to your business and for preparation of the tax forms related to your business. IRS Publication 334 puts it the same way: you can deduct on Schedule C the cost of preparing that part of your tax return relating to your business as a sole proprietor.
What usually counts toward the business share:
- A CPA's or enrolled agent's fee for preparing Schedule C and the related business forms
- The business share of tax software and e-filing fees
- Tax advice about the business, such as quarterly estimate planning or entity choice
- Fees for resolving an asserted tax deficiency related to the business
How to split one bill between business and personal
Most preparers send one invoice. The cleanest fix is to ask them to itemize it by schedule. If they won't, allocate on a reasonable basis — time spent on each part is the easiest to defend — and keep a note with the invoice saying how you did it.
Worked example. A preparer charges $600 for a 2025 return with a Schedule C for a freelance design business and a Schedule E for one rental condo, and itemizes it like this:
| Portion | Fee | Where it goes | Deductible? |
|---|---|---|---|
| Form 1040 and personal schedules | $240 | Personal | No |
| Schedule C (freelance business) | $240 | Schedule C, line 17 | Yes |
| Schedule E (one rental property) | $120 | Schedule E, line 10 | Yes |
| Total invoice | $600 | $360 deductible |
$240 goes on Schedule C line 17, $120 on Schedule E line 10, and the remaining $240 for the personal return is not deductible. Deducted $360 of $600 — not the whole bill, and not nothing. The figures are illustrative. Estimates — confirm with your tax professional.
Landlords and farmers
Landlords. The IRS Instructions for Schedule E (2025) say to include on line 10, "Legal and other professional fees," fees for tax advice and the preparation of tax forms related to your rental real estate or royalty properties. Our landlord tax deductions guide covers the rest of Schedule E.
Farmers. Schedule F has no dedicated professional-fees line. The IRS Instructions for Schedule F (2025) list legal and professional fees, including fees for tax advice and the preparation of tax forms related to your farming business, under "Other expenses" on lines 32a through 32f.
When you deduct it: the year you pay
Under the cash method, IRS Publication 334 says you generally deduct expenses in the tax year you actually pay them. Tax preparation fees are almost always paid the year after the return they prepare, so:
- You pay your preparer in March 2026 for your 2025 return.
- The business share of that fee is a 2026 expense, deducted on your 2026 return.
- The fee you paid in 2025 for your 2024 return is what belongs on your 2025 Schedule C.
This trips people up in their first self-employed year, when there is no prior-year business fee to deduct yet. Estimates — confirm with your tax professional.
Canada: T2125 professional fees
CRA guide T4002 (2025) puts these costs on line 8860 of form T2125, "Professional fees (includes legal and accounting fees)." The guide says you can deduct accounting and legal fees for advice and help with keeping your records, and expenses for preparing and filing your income tax and GST/HST returns. It also allows fees paid to have an objection or appeal prepared against an assessment for income tax, CPP or QPP contributions, or EI premiums. The guide covers business income only, so for the treatment of fees for a purely personal return, check CRA's guidance for your situation.
Keep the invoice with the rest of your receipts
A preparer's invoice or a software receipt is easy to lose because it arrives at the one time of year you are not thinking about expenses: right after you file. Most arrive by email.
ExpenseBot is an expense tracker that scans your Gmail for receipts and invoices, including the ones from preparers and tax software companies, and writes each one into a Google Sheet in your own Drive with its date, vendor, amount and category, categorized for Schedule C. You can adjust the category or split a mixed invoice between business and personal, so only the business share reaches your Schedule C totals at year end. It does not work out the split for you and it does not file your return. See how the Gmail receipt scanner finds these, or how the year-end workflow turns a year of expenses into Schedule C totals.
If you are also paying a lawyer, read whether legal fees are tax deductible — the business part uses the same line, but the rules for assets and personal matters differ. For the basics of what a deduction is worth, see what a tax write-off actually is.
Frequently Asked Questions
Are tax preparation fees deductible?
The business part is. A sole proprietor deducts the cost of preparing the business part of the return on Schedule C, line 17; the rental part goes on Schedule E, line 10, and the farm part on Schedule F. The part for your personal return is not deductible for individuals: IRS Publication 529 treats it as a miscellaneous itemized deduction, which IRC §67(h) disallows for every tax year after 2017. Estimates — confirm with your tax professional.
Can I deduct TurboTax or other tax software?
Only the share used for your business schedules. IRS Publication 529 says tax preparation fees include the cost of tax software, tax publications and e-filing fees, so software follows the same business-versus-personal split as a preparer's fee.
My CPA sent one bill for everything. How do I split it?
Ask the preparer to itemize the invoice by schedule. If they can't, allocate on a reasonable basis, such as the time spent on each part, and keep a note of how you split it with the invoice. Only the Schedule C, E or F share is deductible.
Which year do I deduct the fee in?
Under the cash method most sole proprietors use, the year you pay it. A fee paid in 2026 to prepare your 2025 return is deducted on your 2026 return.
Are tax preparation fees deductible for W-2 employees?
Generally not. A W-2 employee's tax preparation fees are personal, and IRS Publication 529 says they are a miscellaneous itemized deduction that can no longer be deducted. Under current law, P.L. 119-21 made that permanent.
I drive for DoorDash on weekends and have a day job. Can I deduct any of what I paid my tax preparer?
Yes, the part that relates to your Schedule C for the delivery work. Ask for an itemized invoice or split it on a reasonable basis; the Schedule C share goes on line 17 of Schedule C, and the rest of the fee is personal and not deductible. Estimates — confirm with your tax professional.
Are tax preparation fees the same as legal fees?
Both go on Schedule C line 17 when they are for the business, but legal fees have different rules for assets, formation costs and personal matters. See our guide to whether legal fees are tax deductible.
This guide is educational and describes US federal rules for the 2025 tax year and the Canadian T2125 rule in general terms. Sources: IRS Instructions for Schedule C (2025); IRS Publication 334 (2025); IRS Publication 529; IRC §67(h) as amended by P.L. 119-21; IRS Instructions for Schedule E (2025); IRS Instructions for Schedule F (2025); CRA guide T4002 (2025). Estimates — confirm with your tax professional.