Don't Forget To Deduct The Cost Of Doing Your Taxes

We might not always remember it, but the IRS says that financial planning and tax preparation costs may be deductible if they exceed 2% of your adjusted gross income.

This includes nearly every degree of tax prep: If you pay for tax-preparation software, for legal advice, or for your accountant to prepare your return for you, it could be deductible.

Note that this is only an option if you itemize, meaning you claim deductions for specific expenses incurred throughout the year, rather than claiming one standard deduction dependent on your filing status. Itemizing isn’t for everyone, but if you have a more complicated financial situation that includes things like major medical costs, property taxes, or charitable deductions, you may save more money itemizing than by claiming a standard deduction.

The tax-prep deduction may be claimed for the year the preparation fees were paid — so your 2013 return is the time to claim the fees you paid earlier in the year for the preparation of your 2012 taxes. Next year, you can deduct this year’s costs.

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