I'm a sole proprietor. Can I deduct the cost of TurboTax Deluxe on my 2019 taxes?

[rwh220]

I'm unsure of the new tax rules and would like an opinion from the TurboTax Community.

[PaulaM]

tagteam is correct. Sole proprietors may deduct tax preparation fees.

However for individuals, miscellaneous deductions subject to the 2% rule have been suspended through 2025 under Tax Reform. See link below for an overview of the Tax Reform changes.

How will tax reform affect my 2019 federal tax return?

edited 11/14/2019 | 7:58 pst

[tagteam]

IRS Publication indicates that sole proprietors can deduct the cost of hiring a tax professional, such as a Certified Public Accountant (CPA), to prepare that part of your tax return relating to your business as a sole proprietor is deductible on Schedule C (Form 1040) or Schedule C-EZ (Form 1040).

See https://www.irs.gov/publications/p535#en_US_2018_publink1000209200

Note that there is no mention of deducting the cost of tax preparation software that is utilized by the sole proprietor to prepare Schedule C. However, it is probably reasonable to presume the deduction would be allowed. Regardless, considering the deductible amount has to be allocated to Schedule C alone (i.e., a fraction of the price of the software), it is most likely not worth entering.

[Critter]

For instance .... if you could have used the FREE version to prepare the return then the cost of upgrading to Deluxe to complete the Sch C would be deductible on the Sch C.   

However, if you needed to use the Deluxe to prepare your return then it would not be a deduction   UNLESS you were using the online version that required the upgrade to the SE version ... in that case the upgrade cost would be deductible on the Sch C but not the base fee for the deluxe.