Can I Deduct Crypto Tax Software from My Taxes?

Zac McClure
ByZac McClure, MBAUpdated on December 19, 2023 · minute read

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  • Tax preparation fees are not universally deductible for all taxpayers. IRS rules dictate that W2 employees cannot claim this deduction, while self-employed individuals can.

  • When in doubt, a crypto tax professional like ours at TokenTax can help to clarify this and all your crypto tax filing questions.

Are tax preparation fees deductible?

Until 2018, when Donald Trump’s Tax Cuts and Jobs Act (TCJA) went into effect, all taxpayers could deduct tax preparation fees from their taxes if they used itemized deductions. However, the TCJA eliminated this deduction for most people. 

Today, you can only deduct tax preparation fees if you are self-employed. The TCJA ends in 2025, although it could be renewed. You are considered self-employed if you’re a contractor, freelancer, or small business owner.

If you are self-employed, you can deduct the following crypto tax preparation expenses:

How to claim a tax preparation fee deduction

Here are five simple steps to claim a tax preparation fee deduction if you qualify.

  1. Identify your filing status

    Confirm that you fall under the self-employed category, including contractors, freelancers, or small business owners, making you eligible for tax preparation fee deductions.

  2. Navigate to Schedule C

    If using paper forms, locate and fill out Schedule C, specifically focusing on the section dedicated to legal and professional fees.

  3. Calculate total tax preparation expenses

    Sum up the costs associated with tax preparation, including expenses for crypto tax software, fees paid to tax professionals, and any charges related to e-filing.

  4. Enter the amount on Schedule C

    In the legal and professional fees section of Schedule C, input the total amount of your tax preparation expenses. This is a crucial step in ensuring accurate deduction of these costs.

  5. Submit your forms

    Once you've completed Schedule C, submit your paper forms along with the rest of your tax documents.

When in doubt, consult with a crypto tax professional like ours at TokenTax to get clarity about this and all your crypto tax filing questions.

To stay up to date on the latest, follow TokenTax on Twitter @tokentax.

Zac McClure
Zac McClureCo-Founder & CEO at TokenTax
Zac co-founded TokenTax after his career in international finance and accounting at JPMorgan, Imprint Capital and Bain. He has worked in more than half-dozen countries and received his MBA from the UPenn Wharton School.

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