Can Professional Fees Be Deducted on a Personal Tax Return?
There are lots of professionals in the world who are happy to take your money. In any given tax year, you may be paying fees to accountants, stockbrokers, real estate agents, lawyers and doctors for one service or another. Depending on the professional and the service you pay them for, some of those fees may be tax write-offs.
If it takes money to make money -- and it frequently does -- the money you spend is tax deductible. That includes managing or maintaining investments, paying for investment advice, consulting tax firms or getting legal advice about your investments. You can also write off appraisal fees if you pay them to figure how much you've lost to theft, or the value of a charitable donation. Even the cost of clerical help to manage your finances is deductible.
Anything you pay your doctor or dentist that's not reimbursed by your insurance is a deductible medical expense. That includes chiropractors, Christian Science practitioners and acupuncturists, and it applies to your bills and your family's. Unfortunately, you can't write off every unreimbursed dollar. You have to subtract 10 percent of your adjusted gross income from your total medical expenses, then you claim what's left as an itemized deduction. If you take the standard deduction, you're out of luck.
Most of your non-financial, non-medical fees aren't deductible unless they're for business. If you incur them as an employee and your employer doesn't reimburse you, you can claim them as miscellaneous deductions on Schedule A. There are only a few other ways you can claim the fees as a write-off; legal fees if you're fighting the IRS over taxes are one of them. If all you're doing is suing your neighbor, there's no write-off for legal costs.
If you don't itemize deductions, you don't get to write off fees. Even if you do, it's tough. Non-medical professional fees are classed as 2 percent expenses, along with hobby and employee expenses. You add all such expenses together, subtract 2 percent of your AGI and whatever is left is your deduction. If what's left is zero, you don't get to a write-off. If the standard deduction is greater than all your itemized write-offs combined, you're better off giving up the fee-deduction.
A graduate of Oberlin College, Fraser Sherman began writing in 1981. Since then he's researched and written newspaper and magazine stories on city government, court cases, business, real estate and finance, the uses of new technologies and film history. Sherman has worked for more than a decade as a newspaper reporter, and his magazine articles have been published in "Newsweek," "Air & Space," "Backpacker" and "Boys' Life." Sherman is also the author of three film reference books, with a fourth currently under way.