Fast Forward Academy Test Prep. & CPE

Where Enrolled Agents Can Educate Taxpayers on the Most Commonly Overlooked Personal Tax Deductions


The only thing worse for a taxpayer than having to fork over a ton of money each year in taxes, is paying more than what they owe. If this happens, the enrolled agent has failed in his duties as a registered tax return preparer.  It is the responsibility of enrolled agents to ensure, as with any RTRP, that taxpayers are able to save every penny coming to them by taking full advantage of little-known tax deductions.

Cost of Filing Income Taxes

Taxpayers are able to deduct the cost of tax preparation on their Schedule A.

Attorney Bills

Taxpayers are able to deduct lawyer bills provided the objective of the legal action was to collect taxable income. Say a taxpayer is divorcing and forks out $5,000 for an attorney to secure alimony. That sum is deductible. Also, any fees associated with the preparation of living wills and trusts are deductible.

Financial Planners & Management Services

Few taxpayers realize that cost of subscribing to investment newsletters and magazines are deductible, as are the fees for hiring financial advisors.  In fact, any monies doled out on services associated with managing a taxpayer’s money falls into this category.

Theft or Destruction

Whether its an SUV pummeled by hail or a new roof torn off during a hurricane, damage not insured by home or auto insurance is deductible.  The amount is commensurate with the value of the items after depreciation is considered, otherwise known as the “loss of value.” The same logic applies to taxpayers who have been burgled at home.  Stolen valuables not listed in homeowners insurance, or items for which partially reimbursement occurred, are deductible -- either the total amount or the remainder -- by completing Form 4684. Remember, though, these losses deducted are subject to a $100 deductible.

Teaching Expenses

Individuals working  900 hours as a K-12 school teacher, aide, counselor, or administrator, are able to deduct $250 worth of out-of-pocket expenses for classroom supplies. If more than $250 was spent, the rest can be added to Schedule A.

Lifetime Learning Credit

Thanks to the Lifetime Learning Credit, taxpayers enrolled local community college, or taking continuing education classes for work, can earn up to $2,000 in tax credits. An enrolled agent’s tax CPE courses would also qualify for this credit, which can also be claimed for a spouse or dependent provided the taxpayer is already using a different credit for them.  It should also be noted that taxpayers participating in an employer tuition reimbursement program cannotclaim the Lifetime Learning Credit. 

Charitable Travel

While most people understand that cash or goods donations to charitable organizations are tax-deductible, mileage accrued during charitable work is deductible as well.  This would include things like driving to a volunteer location.  Taxpayers should be advised to maintain a log of miles, and they can deduct 14 cents per mile, plus parking and toll feels.  The cost of public transportation can also be deducted. This is similar to tax deductible job relocation moving expenses, only for charity.

Timeshare Taxes

While property taxes paid on timeshares are generally subsumed in yearly maintenance fees, these taxes can be deducted if the taxpayer pays them independently.  Moreover, if a taxpayer sold a home or timeshare in 2100, the paid property taxes are deductible even though the property is not actually owned.  Enrolled agents should instruct clients to check the Settlement Statement for these figures.

State Income Taxes

If a taxpayer owed state tax from 2009 and paid it in 2010, they can deduct it.

Hobby Expenses

It is true that while most personal hobbies don’t qualify for the entire amount of the small business tax deduction, taxpayers may still be able to deduct some expenses for it. The rule of thumb is that taxpayers can only deduct as much income as was made. So if your obsession with puppies netted a taxpayer $500 but cost $1,000, only $500 can be deducted in expenses. This may be a useful way to recoup a portion of the money if a taxpayer has a small business that has gone at least three years without turning a profit (IRS categorizes this operation as a hobby).

Penalties for Withdrawing Savings Early

Fees associated with cashing in a can be deducted directly on the 1040.

Medicare B and D Premiums

The IRS has ruled that Medicare B and D premiums can be deducted as medical expenses.

IRS Circular 230 Disclosure

Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.


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