Hi TurboTax Community,
Thank you for your kind reply to my previous tax question. We’re blessed to have all of you excellent, competent, and caring tax advisors here.
QUESTION: Should I put my legal, accounting, and tax (LAT) advice/services expenses on Schedule C or Schedule E, or split it and put it on both?
Like 99% of the people in this community, my goal is both maximize my tax deduction and reduce my IRS audit probability.
I’m writing for my married metro D.C. area friend, Mike. His question is about putting his legal, accounting, and tax advice/services expense on his Schedule C or Schedule E, or splitting it and putting it on both?
Mike and his wonderful wife file a joint Form 1040. He attaches both a Schedule C for his coaching business and a Schedule E for their investment rental home. Both entities net about $20,000 each after expenses.
This year (2022), Mike hired a local professional advisor (call him Tax Tom) who is a combined business lawyer, real estate advisor, and accountant (CPA) to help him with his business growth and real estate investing plans.
Tax Tom told Mike how best to claim his LAT bill on Schedule C and/or Schedule E expenses. Mike said that he’s pleased with Tax Tom’s advice and services.
Tax Tom said he would bill Mike for his legal, accounting, and tax (LAT) advice/services on 1 invoice. Or he would split it into 2 invoices to make Mike’s LAT bill expense and accounting easier, if necessary.
But Mike asked that Tax Tom wait on the billing invoice(s) until he researched the matter more. Mike trusts Tax Tom (and me) to help him put this LAT expense on the best Schedule(s). I told Mike I would reach out to the clever TurboTax Community people to see their thoughts.
So, clever TurboTax Community, what would your folks do if you had a similar situation and were filing your tax return?
Does it matter whether Mile puts Tax Tom’s LAT bill on line 17 on Schedule C. Or on line 10 on Schedule E? Does Tax Tom need to simply split his bill for both Schedule C and E? If the bill is split, what % portion goes on what Schedule?
I’ll bet that I’m not the only one in this community with questions about the best way to account for and expense legal, accounting, and tax (LAT) advice and services regarding Schedule C and E.
Thanks again for all your excellent tax help.
