Most attorneys are a far stretch from the fictional ”Breaking Bad” lawyer Saul Goodman, who asked few questions and accepted only cash. One Forbes contributor says that in the real world, there are ways to make legal bills manageable. One of the best strategies is to ensure all qualifying tax-deductible expenses related to business fees are accurately tallied and noted by your accountant. Remember you cannot deduct your personal legal expenses.
- Tax advice. Legal fees incurred for tax advice are deductible. If you tap the expertise of an attorney when setting up your business or expanding business operations, this can really boost your chances for avoiding nasty taxation surprises down the road.
- Investment-related legal fees. These normally come under miscellaneous itemized deductions. It all depends on the nature of those legal fees as to whether or not those costs are tax deductible.
- Contingent lawyer’s fees. Determining what is allowed and what isn’t from the IRS’s point of view is a bit tricky, when it’s regarding the legality of these write-offs. A visit with an attorney would be in order.
- Legal fees in employment cases are tax deductible. It’s pretty clear cut that in the case of a lawsuit lodged by a disgruntled employee against the company, legal fees to defend against the suit are tax deductible.
- Legal fees incurred to determine a tax obligation. If these legal fees are directly related to conducting a business enterprise and ascertaining the amount of taxes collected or refunded, they would be considered a legitimate business tax deduction.