What if someone else paid my Tax Preparation (CPAs) Fees on my behalf for preparing my taxes?? Are those fees deductible for ME to include with my tax return?? (fyi... I'm not a dependent & also aware subj to 2% of AGI rules)
thx
If you appoint me as your agent for the purpose of paying some of your obligations out of your money, you can deduct allowable expenses including tax preparation fees.
But if your friend or even a perfect stranger decided to pay your expenses just because, you do not have a deduction.
I am not a tax expert, but the following must be true for the tax code not to be a total farce.
You can deduct what your preparer charges you. You cannot deduct what your preparer pays a subcontractor.
Nevertheless, I never underestimate the stupidity Congress can rise to.
If the person does it as an agent, it is still ultimately coming from the taxpayer's pocket. I don't think that is really an issue.
Depending on the relationship of the people involved and exactly why someone other than the taxpayer paid the taxes, I might consider A paying B's taxes as a gift of money from A to B, such that B can deduct the taxes because it was actually his money.
But A making a gift to B by paying B's taxes can't deduct the payment.
No one gets the deduction. Treasury Regulations section 1.212-1:
You didn't pay the fees, and the person who paid them didn't incur them with respect to taxes on his/her own income.
The answer is how one interprets Lang vs Comm'r, TCM 2010-286 and whether the payment by someone else was intended to be a bona fide gift.
Briefly, Lang (not a dependent of anyone) was denied a deduction for medical expenses and property taxes that were paid directly by her mother. The Tax Court, using the concept of substance over form, ruled that the payments were an indirect gift to her daughter and as such were deductible by the daughter.
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