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Written by : Marcela Clusky
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welcome to hump is tax talk my name is lissandra Everett I am the home biz tax lady where I help home business owners win the tax game home biz tax talk airs Monday through Friday 9:00 o'clock ish and when you tune into my show you're gonna hear about topics that are important to the home business community alright let's talk about these legal fees y'all so you know over the it has been a busy legal year so far right we got a lot of stuff going on in the legal front you got Robert Kraft getting pinched down in Florida you got the Jesse small that case you got our Kelly getting arrested you got Paul Paul Manafort and his stuff going on you got Michael Cohen and his stuff going on there's a lot of legal stuff that is going on that's just in the news right and so like and so if it's in the news there are some high-powered attorneys that are involved in this stuff and can you imagine how much these folks is getting paid okay so then that leads one to ask well then um tax deductible and the answer is a definite maybe not let's talk about it all right so if your legal fees are based on a business type of defense so let's say someone happens to sue you for something if it's something business-related then those legal fees can be deducted okay but there was a suspension of the tax deduction if your case was you know centered around sexual harassment and discrimination so think about that before you you know you go lose your mind alright but otherwise but what we're talking about personal legal fees the tax cuts and Jobs Act took that provision out mm-hmm so before January 1st 2018 your legal fees for the most part there were some exceptions y'all we got time to go into that and I am NOT an attorney okay there's all kinds of exceptions to the rules but but prior to 2017 you could deduct legal fees that was subject to the 2 percent floor meaning tax legal fees that exceed 2% of your adjusted gross income or tax deductible that provision has been taken out so where you've got like your all these folks if this all of this stuff is personal legal fees no it is not a tax deduction anymore so who they gonna be writing some fat checks for these folks and you don't get to deduct a dime now there is the question about you know when people get awarded damages right like you get I think the most recent case that I saw was the Monsanto case Monsanto's case where were he was I think he was a groundskeeper that received you know cut multi-million dollar award well you know then still he had to deal with attorneys and so he's going to have to pay those attorneys but he's not going to be able to deduct those legal fees if it was like for punitive damages that's where you'd know punitive damages that is taxable income so if you get this multi-million dollar award for punitive damages you're gonna have to pay taxes on the whole amount okay if any of that goes to your attorneys you're gonna have to pay them they're gonna have to pay taxes on that income right but you are gonna have to pay taxes on the amount that you receive for punitive damages now if you receive damages for like physical injury or illness that is not taxable you still gotta pay do the motor fees but it's not taxable to you but something like punitive damages is taxable to you you still gotta pay attorney fees and they got to pay taxes on that money too so you know so legal fees no it's you know in in general terms not tax-deductible anymore so and let and legal fees rack up quick right because sometimes just a basic legal consult can be five hundred to a thousand dollars hmm now you're talking about hours in bracket hours and hours of attorneys fees weren't you know like the other with that movie um with Tom Cruise back in the day I don't know why I just thought about this movie but it was a great movie with Gene Hackman and they were like adding all of these little these little additional fees you know like billable hours to their to their client bills and stuff that was a great movie you got to go back and watch it but you know those billable hours do start to add up and you know an attorney can be $500 an hour $1,000 an hour and you're talking about these high-profile type people you best believe that that thousand dollars an hour is not anything that's out of the ordinary so you think about all the the millions of dollars of attorneys fees that it can be wrapped up in just in these little few cases alone where know nobody's gonna get the write that off at all that's alright if you can now what an interesting thing I read though is with the Jesse small that case now I was reading I forgot who wrote the article but they were saying that because he originally said that he did this to further his career because he said that that those legal fees actually could be tax-deductible like has a better shot of being tax deductible as a business expense than anything else so I'm gonna be watching that and y'all know when I get the update I'll be let y'all bill right because that's just the T to me I have to know those kind of things but the by-and-large legal fees are no longer tax-deductible and so yeah that's just a bullet that you have to bite when you are talking about you know dealing with lawsuits or having to pay for attorneys for you know for different types of like estate planning you know you don't need only need attorneys for you know dealing with the legal system in a bad way but you need attorneys for you know things like trusts estates you know sometimes you need an ax yes you need an attorney to draft a will so those type of administrative services are no longer tax-deductible either so yeah that was one of those things I was like oh yeah you thought was gone so I kind of knew but now to see the application of it that can be kind of bad okay so yep that's it for today you guys so it's a real quick clip but the legal fees whoo that's the big fat checks but you can't write that off on your taxes no mo hmm all right you guys I gotta run so thank you so much for tuning into home biz tax talk again we air Monday through Friday 9 o'clock dish and you can tune in right here to get your questions answered about your home business taxes if you have not scheduled your 15 minute complimentary consult you can do so at wwm biz tax chat com all right have a great day I'll see you next time bye
Thanks for your comment Merna Hutzel, have a nice day.
- Marcela Clusky, Staff Member
hey what's up everybody this is attorney dan nguyen and today i want to talk about trademarks and whether trademark costs are tax deductible so i don't profess to be a tax attorney or cpa or an enroll agent or a tax professional but i do have being a business owner and having dealt with taxes um on a tangential basis i think i can do my best to answer this question but first you gotta understand what what the irs uses as a standard for what can be tax deductible now generally speaking and this is what i found on the irs website you know it has to be ordinary and necessary okay and so then you get to ask hey what's ordinary and necessary that is common and acceptable in your particular industry in my opinion and i think most most accountants uh tax professionals agree that legal fees and trademark costs are tax deductible okay and so uh it is a furtherance of your business it is something that you are protecting for your business and so i think certainly it is ordinary and necessary for your business and are tax deductible so uh you know if you are a business owner looking to um protect your business name your logo or slogan and uh you know get want to get a tax deduction as a bonus feel free to reach out to us and we can see um you know how we can help you okay this is dan talk to you soon bye
Thanks poka895 your participation is very much appreciated
- Marcela Clusky
About the author
I've studied limnology at University of Illinois at Springfield in Springfield and I am an expert in human development theory. I usually feel aggravated. My previous job was engineering professor I held this position for 6 years, I love talking about climbing and boating. Huge fan of Jeff Bezos I practice volleyball and collect steiff teddy bears.
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