Question for the Money Doctors

Question submitted on Nov 23, 2022.

Question

Hi! Thank you for this website
Q&A:
(1) is the cost of hiring/using a CPA to process taxes a deductible expense?
(2) if cost of hiring/using a CPA no longer is deductible, then what's the point of paying high fees for CPA service?
(3) CPA has made mistakes and IRS has sent letters that are not so overwhelming (it appears the IRS is helpful), so if CPA makes mistakes, it appears better off to save the fee and let IRS help with corrections?

Answer

1. It's important to note that you may not be able to deduct the entire cost of the tax preparation fees. You can only claim the amount of the fee that was accrued by preparing the business portion of your taxes. The rest, including the standard deduction, personal deductions, and credits fall into personal expense.

2. It simply is the law they made. It makes no more sense to me than having everyone in Congress or the Senate have "special health insurance" that is unavailable to normal citizens. It is nothing more than politics.

3. In the event a CPA made mistakes, the CPA failed to follow the minimum of what is expected of a CPA. The CPA is responsible for correct the error they made at no additional cost to you (provided the mistake was solely the fault of the CPA. It is similar to hiring a car mechanic who does something incorrect. It is the responsibility of the mechanic to fix their mistakes at no additional cost to you (even if they have to buy parts to fix the mistakes they mad).

For additional information visit //www.360financialliteracy.org/