Tax Preparation fee

sgfee124 · ‎February 20, 2019

Please answer a question regarding a tax preparation fee.

I paid my accountant $279 in February 2019 to do my 2018 taxes.

My understanding is that tax preparation fees must be deducted the same year as the tax return for which they apply.

In order for the $279 to be deducted on the 2018 tax return, it should show up as an expense on the Quickbooks 2018 Profit Loss Report. However, the $279 expense was incurred in February, 2019.

Do I back-date the expense to 12/31/2018 so it shows up on the 2018 Profit Loss Report and can, therefore, be deducted on the 2018 return?

Thank you for your help,

Steve

QBsguru · ‎February 20, 2019

Unless your accountant has ESP, there is no way to prepare taxes for the current year in the current year. One must wait until the year is closed for the final accounting in order to begin income tax preparation. So tax prep fees are always for a prior period.

If you have a business, you may deduct 2018 tax prep fees paid in 2019 in 2019. As of the new tax reform of 2018, individuals may no longer deduct income tax prep fees.

View solution in original post

RenjolynC · ‎September 14, 2020

I have the information you need, mgala028.

You can use the legal and professional services expense. This is used to categorize the fees with specific business deals, sales transactions, or yearly taxes.

You also have the option to create an expense and name the account as you wish. Before doing so, I recommend consulting with your accountant for advice.

To create an expense account, here's how:

Go to Lists > Chart of Accounts.
Click the Account drop-down located at the bottom, then select New to create a new account.
Select Expense as an account type, then click Continue.
Enter the account details and click select Save & Close.

Please see this sample screenshot:

For reference, you can check out this article: Create, edit, or delete account in QuickBooks Desktop.

If you have any follow-up questions, please let me know in the comments below. I'd be glad to answer them.

View solution in original post

QBsguru · ‎February 20, 2019

Unless your accountant has ESP, there is no way to prepare taxes for the current year in the current year. One must wait until the year is closed for the final accounting in order to begin income tax preparation. So tax prep fees are always for a prior period.

If you have a business, you may deduct 2018 tax prep fees paid in 2019 in 2019. As of the new tax reform of 2018, individuals may no longer deduct income tax prep fees.

sgfee124 · ‎February 20, 2019

QBsguru,

Thank you for an excellent answer! You answered my question perfectly. I have a business so I will deduct the $279 in 2019.

mgala028 · ‎September 14, 2020

Under what Expense type did you record the tax preparation fee?

RenjolynC · ‎September 14, 2020

I have the information you need, mgala028.

You can use the legal and professional services expense. This is used to categorize the fees with specific business deals, sales transactions, or yearly taxes.

You also have the option to create an expense and name the account as you wish. Before doing so, I recommend consulting with your accountant for advice.

To create an expense account, here's how:

Go to Lists > Chart of Accounts.
Click the Account drop-down located at the bottom, then select New to create a new account.
Select Expense as an account type, then click Continue.
Enter the account details and click select Save & Close.

Please see this sample screenshot:

For reference, you can check out this article: Create, edit, or delete account in QuickBooks Desktop.

If you have any follow-up questions, please let me know in the comments below. I'd be glad to answer them.

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