Are Attorney Fees Tax Deductible?

It’s April 14th and if you haven’t yet filed your taxes, chances are you may still be looking for some final deductions. While we are not CPA’s–and would refer you to a  CPA for any real tax advice–we often are asked the question, “Are your fees tax deductible?”  Below is an article from Lawyers.com with general rules and deductions when it comes to attorney fees.

If you haven’t been there yet, and without jinxing your luck, the odds are good you’re going to need legal advice some day. Maybe you’re thinking about a divorce, or you need help writing a lease for the house you want to rent.

Regardless of why you need an attorney, you’re going to have to pay for?the lawyer’s legal services. Can you take a tax deduction for those attorney’s fees? Usually not, but there are some exceptions.

General Rules

The general rule is simple enough: You can deduct attorney’s fees you pay for:

  • Trying to produce or collect taxable income, or
  • To help in determining, collecting or getting a refund of any tax

In simple terms, you can take a deduction if you need an attorney’s help to make money you have to pay taxes on, or if an attorney helped you with a tax matter, like representing you in an IRS audit. If the legal fees are somehow connected to taxes or taxable income, you can take a deduction.

Is There a Deduction?

There are all kinds of situations that qualify for the tax deduction, such as fees you may pay for:

  • Tax advice you may get during a divorce case, such as how you and your ex-spouse will take deductions for home mortgage interest or child care, or whether alimony is tax deductible by the payor spouse or taxable income to the recipient spouse
  • Trying to get your ex-spouse to pay past-due alimony
  • Defending a lawsuit filed against you on work-related matter, such as an unlawful discrimination claim filed by a former employee that you fired
  • Receiving your share of a class action settlement in a lawsuit against your employer or former employer. For example, your former employer settles a class action claiming that it didn’t pay overtime wages. You get a $1,500 check for your share of the settlement, but $2,000 is reported to the IRS as income because you’re charged $500 as your share of attorney’s fees. Because the income is work-related, you can take a tax deduction for the $500 in fees

Generally, you can’t deduct fees paid for advice or help on personal matters or for things that don’t produce taxable income. For example, you can’t deduct fees for:

  • Filing and winning a personal injury lawsuit or wrongful death action – the money you win isn’t included in your gross income and so it’s not taxable
  • Settling a will or probate matter between your family members
  • Help in closing the purchase of your home
  • Defending you in a civil lawsuit or criminal case that’s not work-related, such as defending you on a drunk driving charge or against a neighbor’s claim that your dog bit and injured her child

How and How Much?

Generally, you deduct attorney’s fees as an itemized miscellaneous deduction on Schedule A of your Form 1040 tax return. You may not be able to deduct all of your fees, though. Miscellaneous deductions are limited by the two percent rule: You can deduct only the amount of your miscellaneous deductions that’s more than two percent of your adjusted gross income (AGI) – the amount you entered on line 38 of your 1040.

Have a Business?

As a business owner, you can take a deduction for the same things discussed above. If you pay an attorney to prepare your taxes or to help the business make money, you can deduct the fees. For example, you can deduct fees paid for:

  • Collecting money that’s owed to you by a customer
  • Defending you or an employee in a lawsuit over a work-related claim, such as a discrimination lawsuit filed by a former employee
  • Negotiating or drafting contracts for the sale of your goods or services to customers

Also, you can usually deduct attorney fees you paid in connection with starting up your business or buying an existing business.

Generally, you deduct these business-related expenses the same way you deduct other ordinary and necessary business expenses. You need to file Schedule C with your 1040 tax return.

Again, we are not CPAs or Tax Attorneys but wanted to provide this information as a resource to our clients as questions about deductions and attorney fees often arise this time of year.

Need an expert in family law in the Tampa area? Please call our office to schedule your consultation today! (813) 254-0156 or fill out the form below.

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Must Read: What to Expect When Splitting From Your Spouse

Get ready to feel uncomfortable. Splitting from your spouse brings on a whole new set of emotions, discomfort and uncertainty.

tampa divorce attorney comfort zone

Once you’ve made the decision to separate from your spouse, get ready for your world to change. You may be over the fighting, and anger but the uncertainty and new situations you find yourself in during a divorce are enough to make the most secure person a bit uncomfortable. I thought this article was good to share because as a Family Law Attorney, we rarely spend time talking about the emotional part of divorce and for your benefit, focus on the facts.

 

This article was originally published in The Huffington Post by Martha for divorcedmoms.com.

About to separate or are recently separated? Here are eleven expectations to demystify the crazy train you are about to board and help you navigate the process. Good luck!

1. You will be so afraid of the unknown that you will reason with yourself that even though you are miserable, you at least are comfortable enough that you can endure your unhappy marriage. You will try to convince yourself of this, although in your heart of hearts you know that it isn’t true. You will tell yourself lies and convince yourself that you shouldn’t split — for the kids, for financial reasons, etc. You will bargain with yourself because you are scared. Know that this is normal.

2. The rollercoaster and complexity of emotions you will feel when the decision is made to separate is unlike anything you have ever experienced. The grief, the pain, the confusion, the fear, the desperation of wanting to be loved after your spouse is gone. But even though you don’t know it, there is a weight that will slowly start to ease from your shoulders — the same weight that you denied all this time when you told yourself nothing was wrong.

3. Your self-esteem may shatter, and you will be desperate for love and validation. You will think that nobody will ever love you or want you again, and you may be tempted to to date immediately and latch on to the first person who pays attention to you. Resist this urge to attach yourself, even if you have not had that romantic touch or intimacy for a long time. Trying to fill that void with another relationship robs you of the chance to heal.

4. Although you may tell yourself that you’re fine, you will need a support system: a therapist, a support group, good friends, the non-judgmental anonymity of online forums. Whatever combination of systems you choose should help you attain two objectives–creating a safe place for venting, while also helping you find constructive ways to cope with the divorce in a healthy manner.

5. Once you and your spouse decide to split, you will feel like you are getting sprayed with an industrial fire hose. The number of “to-do’s” and “should-do’s” regarding emotions, finances, legal issues, custody, and other logistics will come at you with incredible urgency; you will feel paralyzed and overwhelmed. Understand that splitting is a process. Like any process, there are things to address immediately (safety, shelter, income), things to address a little bit later (understanding legal and custody issues, finding an emotional support system) and there are things to address longer-term (ensuring your separation agreement is something you can live with, making sure you and your children are adjusting). You will need to remind yourself that divorce is like a marathon and it requires patience and persistence. Save yourself the stress by accepting that not everything has to be done right now.

6. You will have no control over your spouse’s behavior. For serious offenses (threatening harm, cleaning out your savings account or wracking up debt on a joint credit card), you will absolutely need to take action. But there will also be annoyances that may not endanger you, but will anger you. It may seem like they are trying to make your life as miserable as they possibly can, which could result in a long, drawn-out, expensive, soul-sucking divorce for you if you let it. You will need to remember that although you can’t control their behavior, you can control how you react to it. Your decision to take the high road despite how they act is entirely up to you. Like most things during the split, it will be easier said than done.

7. You will be tempted to make certain divorce decisions that are driven by emotion, rather than driven by logic and handled in a business-like manner. You will constantly forget that divorce, boiled down, is a business transaction — a splitting of assets and incomes. The logical part of you will understand this, but the part of you that is hurt may spend months fighting over things that have nothing to do with business at all. During the legal process of divorce, you will be forced to choose your battles. Choose wisely. You will need to learn when to fight for the things that are rightfully yours, but also when to let other things go. You will need to learn that nobody wins in divorce. Otherwise, you will find yourself robbed of years of your life fighting in court, having spent tens of thousands of dollars on legal fees that could have been put to better use in your post-divorce life, and so emotionally distraught that moving on will be extremely difficult.

8. You will find yourself in new situations that make you uncomfortable. There are too many to mention here. You may be re-entering the workforce. Your budget may be tight.

9. Your children could have trouble adjusting. If your social life revolved around other married couples, this dynamic may seem miserable for you. You may find friends treating you differently, thinking for some reason your split means that their relationship is in jeopardy. Understand that you are not alone in all of these struggles, and that whatever you need — career help, financial advice, counseling, new opportunities for socialization — are out there. You owe it to yourself to research those resources. Do not allow any of this discomfort to make you bitter, or drive you into hiding.

10. In your times of despair, you will wallow in self-pity. You will break down frequently at the most inconvenient times and say to yourself, “My life was not supposed to be like this. I thought my marriage was perfect and we’d be together forever.” You will feel ashamed and feel like you are a failure. This is part of the grieving process, and you will need to learn how to balance it all: accepting that your circumstances changed, learning how to deal with those changed circumstances, and also learning how to heal and move on. You will need to learn that you are not a prisoner to those circumstances, and it is you who has the power to come out of this whole ordeal a stronger person.

11. You will learn that the split with your spouse has presented you with a choice and it is your decision alone how you handle it. You can choose to look at this split as a trauma from which you will never recover, and to be guided by anger and fear and not knowing what to do, or you can choose the path that takes more work — the path where you ask for assistance, get the support you need, educate yourself about every aspect of the divorce (and there are many), and understand that you will have the power to get through it all. The choice is yours.

Looking for a divorce attorney in Tampa, FL? Give us a call or fill out the form below and we will contact you to schedule a consultation.

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Snapshot of the Military Lifestyle (Infographic)

There isn’t anyone out there who wouldn’t agree that military life is difficult. This survey details everyday stresses according to over 6,200 service members and spouses surveyed.

 

39% of military spouses feel stressed all the time; 30% of service members feel stressed all the time. With this much stress in the average service member’s life, marriage and relationships, it is not a surprise that a some military marriages end in divorce!

This infographic is an eye opener into what you and your spouse are experiencing, and will hopefully give you some insight as to what issues one another are dealing with. Understanding your spouse and their stresses can help keep your marriage together, even when it is at its most difficult time.

 

 

2014-military-family-lifestyle-survey-full

Source: https://www.bluestarfam.org/resources/2014-military-family-lifestyle-survey

If you are considering a divorce, and you are in the military please contact my office at 813-254-0156 to schedule your consultation. When dealing with the stresses of divorce the last thing you want to deal with is an attorney who is inexperienced with the nuances, and paperwork required with a military divorce.

 

Prenups and Child Support Obligations

Should I get a prenup to protect my income from being considered in my future spouse’s child support obligation?

 

Errantly, many single parents or significant others of single parents believe they need a prenuptial

agreement before moving on to marriage in order to protect themselves, and their significant other,

from an increase in court ordered child support.

 

For child support, the court only looks at the income of the parent/payor, and does not consider the

income of any other family or household members. If you only want a prenup to protect your income

from being considered for your spouse’s child support obligation for children from another relationship,

you do not need one.

 

There are many reasons why a prenup would be appropriate prior to entering into a marriage. Some of

the more common reasons to choose to do a prenup are to:

 

1. Limit exposure to alimony in the future, particularly when one spouse has substantial

income or assets;

2. Provide for children’s inheritance (particularly in second marriages); or

3. Maintain an asset as a separate asset, not subject to division in a dissolution, for

example if there was a business or a home that was owned prior to the marriage.

If you choose to do a prenup, each party will need to hire a separate attorney to guide them through the

process. If you are considering marriage and would like to protect your assets, please contact my office

at 813-254-0156 to schedule your consultation.

7 Daily Steps to Healthy Co-Parenting

Healthy co-parenting is key to helping your children through the difficulty that is divorce. Even though you and your spouse have ended your relationship, it’s important to keep in mind that it shouldn’t alter the relationship each of you have with your kids. Below is a great article on healthy co-parenting, originally posted from Women With Worth.

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“A few months back I had some friends ask if I would write about the birds and the bees. It was uncomfortable for some but I did it.  Now I’ve had a few friends ask that I write about co-parenting. It could be because I have a not so common co-parenting situation. It will be uncomfortable for some but I did it. I’ve been co-parenting with my ex-husband for 14 years and while we’ve had a few speed bumps along the way, we’ve had an oddly easy road. I honestly can’t remember the last time we had a disagreement and have no idea when the last time we actually verbally argued . I can say with certainty that it takes maturity on both sides to make it work and it has to be ALL about the child. I’d say when it comes to co-parenting ,on a scale of 1-10, 10 being the best, we’re a solid 11. I’ve learned a few lessons over these 14 years that I think are pretty vital to assure that co-parenting works. I’m aware that there are unique situations that might not fit into these 7 suggestions but I also know that the majority of co-parenting situations can be so much easier than we make them. This is simply what I think are vital qualities to a healthy child in a co-parenting situation.

 

1. Brush your teeth and don’t forget to scrub your tongue.
Rule number one is to keep your mouth clean and to never let nasty words about your co-parent leave your mouth and enter the ears of your child. Bad mouthing your child’s other parent is toxic to the child and you are essentially bad mouthing half of who they are. You’re also making yourself look mean and bitter while slowly grating away at who your child is. My ex and I have always made it a point to hug each other when we are in front of our daughter even if we wanted to wring each others necks. She has never heard a single negative thing out of either of our mouths about her other parents, never and that includes step parents. No matter how solid you think your relationship is with your child, no matter how right you think you are in your feelings towards your co-parent, if you bad mouth them your child will resent you for it at some point in their lives. It might not be tomorrow or even 5 years from now but I promise it will happen.  Bad mouthing your child’s other parents falls in the category of Parent Alienation Syndrome and you don’t want to be that crazy parent do you?

 

2. Do this  math problem everyday. 1+1= 1
Your child should have one family. Co-parents need to be strong enough to accept each other as family and not make the child feel like they are living two separate lives.  A child should never have to pack an over night bag to go stay at their parents house. A child should have everything they need at both houses and shouldn’t feel like a guest or overnight visitor in either home. All extended family members are equally family members, even if you think your side of the family is better than theirs. Our daughter has 4 half sisters, a half-brother and a step sister but our family doesn’t use those words. In our one big family she has 5 sisters and a brother. Step parents are just as responsible and respected as bio parents. We do not have separate birthday parties and we all sit together if our child has an event we need to attend. We are her family, one family.

 

3. Do yoga every morning                                                                                                                                                            Stretch it out, you’re going to need to be flexible. My co-parent and I threw out custody papers a long time ago and decided to simply be adults about it all. We don’t believe in “my time” and “your time”. She’s our daughter, not a possession. In or eyes it doesn’t matter if she’s with me or him, as long as she’s with family. We do every other weekend but in the summers and holidays we kind of just do whatever. This year she spent Mother’s Day at his house, not because I didn’t want her with me but because she was staying that weekend with him and he wanted to cook dinner for his mom and have her there too. She was with family and that’s what matters.  We simply share in the joy of raising her with out the stress of a schedule drawn out by lawyers who don’t really know our family dynamics. If you are all about sticking strictly to the papers then I hope you never have anything come up where you might need your co-parent to work with you bending them a little. You can’t have it both ways.

 

4.Wash your laundry everyday, empty the dirty laundry hamper.                                                                          Let it go. Stop airing dirty laundry.  If you’re still bringing up what your co-parent did wrong 2, 5, 10 years ago then you are carrying a weight that is crippling you and the healthy growth of your child. Let it go.  And really, how clean is your closet? Be honest. There is no perfect parent so if you want to point out your co-parents flaws, you might want to get a mirror.  Life is much better for all involved if you learn to encourage each other as parents instead of bash each other or try to win as the better parent.  The parent who’s keeping score will always end up to be the loser.

 

5.Take off your tiara  and pack it away                                                                                                                                  It’s no longer about you. Your days of reining over your world are over. It’s now only about the child and what’s best for them.  What is truly in the best interest of your child might not match what you feel is in your best interest. Sorry for your luck. If you are currently arranging things to ease your feelings then you’re doing it wrong.  Your job is to nurture the relationship between your child and your co-parent without letting yourself get in the way. What!?  Yes, they aren’t puppets, they’re people and trying to control their relationship is a hopeless battle. Instead try encouraging them to have their own unique relationship and not one you designed for them.  If one of your parents bad mouthed your other parent or tried to control your relationship with them, break the cycle instead of continuing a toxic tradition.

 

6.Upgrade your cell phone plan                                                                                                                                         Communicate with each other, respectfully. Talk about things, talk about everything. Talk to each other, not through your child. Don’t bottle issues up only to explode later or pull them out as a weapon when needed. Just communicate and work things out like adults.  You are not always going to see eye to eye and that’s okay, it’s normal but it doesn’t have to be World War 3. This is when the yoga things comes in handy again. You’ll have to bend and compromise. You can’t always have your way. Have enough respect for yourself, your co-parent and most important your child to sit down and work out issues before they cause friction in your family.  NEVER EVER EVER involve your child in adult situations, they are children and need to stay that way. They should not shoulder the burden of adult problems.  Involving them in adult situations is extremely selfish and immature.

 

7. Take a daily trip.                                                                                                                                                                  So remember that one time when you really really liked your co-parent, maybe even loved them.  There had to be a time at some point when you thought enough of them to lay down with them if you know what if you know what I’m saying.  Remember that daily.  Gross right? Not really. Remembering why our child’s here in the first place can take away negative thoughts about your co-parent. I mean really, look at your child and remember that they wouldn’t even be here if it wasn’t for your co-parent. Try thanking them for it today.

 

I think my most rewarding moment as a parent was when I got a call from the school counselor when my daughter was in second grade. She told me that she had my daughter and another little girl in her office just chit chatting about different things. The other little girl said that her parents were getting a divorce and she was mad. My daughter chimed in and said “So what, my parents are divorced and they love each other”. The counselor was calling to tell me congrats on whatever it was that my ex and I were doing because our little girl was clueless that divorce can cause major issues. She was just completely confident that no matter what her mommy and daddy loved her and each other and that’s all that counts.”