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Itemized Deductions Schedule-A


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Old 04-09-2014, 07:45 PM
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Writing Off Criminal Defense Expenses

I know that in general the answer is NO.

However, let me get you some additional background. I was arrested in the end of last year while being on a business trip to Eastern Europe due to request of security service from one of post-soviet countries. I'm financier working for large US company. I was charged of illegal banking that would had happened in 2005 in that post-soviet country. In January 2014 all charges were dropped. As I signed quite sizable checks for lawyers in 2013 and 2014, I'm obviously very much interested if I can write-off these expenses.

I would consider these defense expenses business related (being on a business, the clearance from all charges was a prerequisite for keeping the job, the case was related to one of my previous jobs), but I'm not sure if I can use this line of reasoning in case of IRS audit.

Any advice or the link to additional info would be very appreciated.



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Old 04-10-2014, 05:36 AM
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Join Date: Oct 2010
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Quote:
Originally Posted by Syavab View Post
I know that in general the answer is NO.

However, let me get you some additional background. I was arrested in the end of last year while being on a business trip to Eastern Europe due to request of security service from one of post-soviet countries. I'm financier working for large US company. I was charged of illegal banking that would had happened in 2005 in that post-soviet country. In January 2014 all charges were dropped. As I signed quite sizable checks for lawyers in 2013 and 2014, I'm obviously very much interested if I can write-off these expenses.

I would consider these defense expenses business related (being on a business, the clearance from all charges was a prerequisite for keeping the job, the case was related to one of my previous jobs), but I'm not sure if I can use this line of reasoning in case of IRS audit.

Any advice or the link to additional info would be very appreciated.
Normally, you cannot deduct criminal attorney fees because the IRS considers this a personal expense. Also, the IRS often defends its refusal to allow taxpayers to deduct criminal charges under the guise that they are not a necessary expense. A deduction for criminal defense can be tricky depending on the nature of the case and your defense, so it's wise to consult a licensed tax attorney ; You can only deduct expenses you pay for in the tax year. deduct legal fees related to performing or keeping a job. But you can't deduct parking tickets and fines or personal legal expenses. While deducting attorney fees from a criminal case rarely happens, you can claim a deduction if the case involves a primarily income-producing event. However, you need to anticipate objections from the irs if you do claim this deduction
note;
the IRS argued that the federal government should use the tax code as public policy to stop deductible criminal legal fees. However, the Supreme Court ruled that the IRS must allow a deduction of fees when it has an impact on a person's federal taxes, because it is not proper for the IRS to use tax code to implement public policy



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