Educators, remember the days when finances were kept under the radar? They are long gone, and are becoming an undeniable part of our lives. As educators, we are responsible for developing lessons which are relevant, and that reflect the realities our students face in their daily lives. This includes financial literacy. When you teach money concepts to adults, one of the most prominent challenges they face is understanding the language associated with the financial aspects of life. To draw from the legal industry, one of the biggest concerns for a new business owner is, are legal fees for criminal defense tax deductible? That is far too complex of a concept to teach without breaking down into smaller bits. When we teach, we want to make sure to explain all necessary components, in addition to giving an overview of the big picture. We do this by making our lessons relevant and relatable.
Today we’re going to focus on the taxes that may be associated when an individual is accused and/or convicted of a crime. The first step to understanding taxes is learning the general principles. Simply put, “deductible expenses are items you can subtract or deduct from your total taxable income. The less taxable income you have, the less tax you will pay. Deductions can be as simple as meal expenses for a business meeting or gas mileage for turning your hobby into a side hustle; buying a business car or any other vehicle.” On the other hand, “non-deductible expenses include personal expenses, appliance purchases, remodels, etc.” (refer to taxes.lovetoknow.com). In terms of criminal defense cases, while the individual may be found guilty, many expenses associated with the case are not tax deductible. For example, conference calls, printing costs, travel/vehicle expenses, postering, any special research costs, anything related to calls/witnesses/records, and communications.
It is essential to give financial literacy a top priority when you teach adults. Understanding taxes is just one component of everyday money understanding. If you’re unsure where to start, consider what common concerns they may face. For example, how often do you think folks need to monitor their bank statement for fraudulent activity? Or, what about when they visit a grocery store and notice a service fee at an unattended self-checkout kiosk? When we look at what finances look like in a day-to-day job, the options for increasing financial literacy are endless. Focus on simple day-to-day tasks and National Financial Literacy Month resources like those offered by the National Association of Federal Credit Unions.
According to Investopedia, there are a variety of common tax-related vocabulary words that every working adult should know, such as: Unfortunately, going back to our complex example of are legal fees for criminal defense tax deductible? Christopher Peterson’s, Jr. agrees that legal costs as a whole are not tax deductible, however “certain legal fees may be deductible depending on the situation, however, for the most part, deducting personal legal expenses on a tax return is not permitted” (refer to www.investopedia.com). You’ll notice I’ve defined all of these key terms, because that is the simplest way to teach tax terminology to a diverse class. Consider dual language programs that integrate teaching financial literacy. Financial literacy plays a direct role in an individual’s success in life, therefore it should be an essential component of adult language programs.
As for are legal fees for criminal defense tax deductible? If you speak to a customer service representative, they have a duty to document everything; as a result, when you tell them what your issue is, ask them to show you where in the tax code tells them that legal fees are not deductible, and ask why the IRS states otherwise. It could be a clerical error on the part of the service provider; alternatively, it could be an opportunity for you to teach them something new. Laurie Koloski from For Lawyers Only says “If you and your criminal defense lawyer were successfully able to argue that your criminal charge was related to securing your current job, you would be able to deduct these legal expenses. To be clear, legal fees are not automatically deductible. You would need to prove that hiring the lawyer related to your employment.”
With that, when are legal fees for criminal defense tax deductible? As educators, we always strive to learn new and interesting information that can enhance our classroom experience. For example, For Lawyers Only cites an article by Tax Talk entitled “Deducting Legal Fees for Criminal Defense”, which states that if a client can prove that a conviction protects work status going forward then those legal fees are legitimate deductions.
For more information on tax deductions, you can visit the IRS website.