My tax return fees last year were about $1,000 because I itemize on schedule A and have a schedule C form from an active businees. Firstly, I understand that these fees are deductible on both Schedule A and C but are subject to some limitations on Schedule A. What are these limitations?

Second question, can I avoid most of these limitations and what amounts of the fees would be reasonable to deduct on schedule C vs scheduke A? Thanks!

The tax preparation fees in general are subject to the 2% Adjusted Gross Income (AGI) limitation and includable on Schedule A.

This means that the tax preparation fees are deductible only after they exceed this 2% AGI amount. Thus, in general for most taxpayers these fees are really not tax deductible after accounting for the 2% AGI limitation.

However, in your case, you incurred $1,000 in tax preparation fees and you have a sole proprietorship business. So, you should consult your CPA and ascertain what amount of the fees are attributable to your Schedule C.

I would recommend that you perhaps claim a minimum of 50% of fees on Schedule C and balance you can claim on Schedule A. There really is no way to avoid part of the fees being subjected to to the 2% limitations. But, it is safe to claim 50% on your Schedule C, provided you don't have a complicated tax return with inclusion of several schedules such as schedule A, B, D and passive lossess etc apart from Schedule C.

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