Deducting Tax Advisors: Save Money on Tax Advisory Fees

No one “enjoys” paying taxes. On top of that, tax consulting incurs additional costs. Yet many taxpayers are unaware that the fees for a tax advisor or income tax assistance association may be partially deductible. Tax reference books and online tax returns can also offer tax benefits. In this article, as tax advisors in Düsseldorf

and Oberhausen

, we will explain how taxpayers can claim tax advisory services as a deduction. Normally, the costs of tax advisory services are automatically reported by the respective advisor. It is nevertheless helpful to understand the background and perhaps ask about this topic during your next consultation.

Basis: Deducting Tax Advisory Costs

To a certain extent, the costs of tax consulting are deductible as income-related expenses or business expenses. Therefore, it should first be clarified what tax consulting costs are. Assistance with filing a tax return from a tax advisor or an income tax assistance association counts as tax consulting costs. However, computer programs, online software, and professional literature can also be considered tax advisory costs. Even travel expenses to the tax advisor or the costs of a telephone consultation can be partially included.

Tax consulting costs used to be classified as special expenses. Now, these expenses can only be claimed as income-related expenses or business expenses. Additionally, it is important to note that the costs must be directly related to a specific type of income.

Which costs are deductible?

Unfortunately, expenses for a tax advisor cannot generally be claimed. Only those expenses incurred in the process of determining income may be claimed. In practice, this means that, above all, advice on new issues and the preparation of various attachments are tax-relevant. The most common deductible tax advisory costs are listed below.

The following forms may be deductible as income-related expenses:

• Attachment V
• Schedule N
• Schedule SO
• Schedule R
• Schedule AUS

The following forms may be deductible as business expenses:

• Appendix EÜR
• Attachment L
• Attachment G
• Appendix S

It can sometimes be difficult for taxpayers to determine exactly which costs can be claimed. However, a tax advisor knows exactly which expenses are eligible. Typically, the tax advisor will claim the eligible expenses directly.

Taxes in the private sphere are not tax-deductible

Tax advisory costs may also be incurred for personal purposes. Tax advisory costs arising in the context of personal taxation are not deductible. Non-deductible costs include assistance in the following areas:

• Master form
• Child allowance
• Alimony form
• Pension plan
• Capital-forming benefits
• Household-related services
• Tradespeople’s fees

The investments listed have nothing to do with determining income and are therefore not relevant for tax purposes. Of course, a tax advisor can also provide assistance in these areas. However, the tax authorities do not consider these to be unavoidable expenses and therefore do not allow them to be deducted.

Important! The tax advisor should list the deductible and non-deductible private portions separately on the invoice. This makes it easier to distinguish the deductible consulting costs.

Deducting mixed expenses as income-related expenses

Expenses for a membership fee with a wage tax assistance association, tax software, or a reference book cannot be clearly identified as either private or professional costs. These are therefore considered so-called mixed costs. Mixed costs may be claimed as income-related expenses. The tax office accepts the full amount of these costs up to a value of 100 euros. If the mixed costs exceed this amount, they are deducted on a sliding scale.

• If the mixed expenses are between 100 and 200 euros, 100 euros can be claimed. The remainder cannot be claimed.
• If you have higher mixed expenses, another option might make sense. The tax authorities allow you to claim a flat rate of half the costs for the income tax assistance association, professional literature, or tax software. For expenses exceeding 200 euros, this is often the better option.

Deducting tax advisor fees only makes sense above the flat-rate amounts

Before you consider which tax advisor fees can be deducted, you should check whether your income-related expenses exceed the flat-rate amounts. The flat-rate amount is automatically deducted for every taxpayer. If your expenses are below the flat-rate amount, it is not worth claiming the tax advisor fees. Tax advisor fees for rental income or business income have an advantage because there are no flat-rate allowances here. Expenses for a tax advisor can therefore be claimed immediately.

Conclusion: Tax advisor fees can be reduced through tax deductions

In conclusion, it can be said that a portion of tax advisor fees can indeed be deducted directly on the tax return. This effectively makes the tax return more affordable when handled by an expert. In most cases, the aspects mentioned are automatically claimed by the tax advisor without needing to be requested. Many taxpayers therefore already benefit from this tax break on a regular basis without even realizing it. It still doesn’t hurt to ask your advisor whether these expenses are actually being claimed.

Any questions? Our team of tax advisors and other experts is happy to assist with all tax-related matters. With extensive industry expertise, we are the ideal partner for businesses. Simply contact us to schedule an appointment.