Preparer Error-Interest

[zeros]

My client received a letter from IRS claiming an additional amount of $3000 was due. In checking the 06 return I realized that I had entered the wrong amount of withholding from the W-2. Because it was my error, I paid the client for the interest that was accrued.. No penalty was involved. Is there any way I could deduct this expense?

[Roland Slugg]

Refund of fees

You didn't really pay the interest. Your client did, and you simply reimbursed him ... even if you sent the check to the IRS. Treat the amount you paid as a refund/reduction of fee income.