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I know that tax preparation fees are tax deductible in US federal taxes, but I'm not sure if the failure of FBAR and reporting international passive interest income (followed by a subsequent willingness to correct those mistakes) qualifies you to make the same deductions. If the answer is yes, do I have to forgo the standard deduction? Is there a limit to how much I can deduct? Where do I enter the deduction?

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FBAR is enforced by the IRS, and OVDP is administered by the IRS, and as part of the program your tax returns will be examined. So I'd personally say that the answer is yes - treat it as part of the tax preparation fees.

If you want to deduct tax preparation fees, you can do it as part of your itemized deductions, subject to the 2% AGI threshold, so yes - you have to itemize.

It is entered on Schedule A, line 22.

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  • Thanks for your answer. I have a quick follow-up, if you don't mind. If my credit card got charged for 5k in Dec 2013 (for the tax attorney fee), but I paid the bill for this credit card in Jan 2014 can I deduct for 2014 rather than 2013? The reason I'm asking is because the standard deduction is a little higher than 5k and I'll spend more money on the attorney in 2014.
    – Wuschelbeutel Kartoffelhuhn
    Commented Mar 2, 2014 at 15:01
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    Technically you can deduct when you paid, which is 2013. Credit card bill is not deductible.
    – littleadv
    Commented Mar 2, 2014 at 19:18

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