Deductions

A Guide to Little Known Tax Deductions For Lawyers

A Guide to Little Known Tax Deductions For Lawyers

Lawyers are a societal necessity, providing legal expertise and representation, often navigating complicated issues for their clients. Amid the day-to-day complexities of their profession, many lawyers may overlook potential tax deductions that could significantly impact their finances each year.

In this article, we take a look at some little-known tax deductions that many attorneys can take advantage of, ultimately optimizing their tax returns. It is wise for those in the legal field to work with tax firms that specialize in assisting lawyers and paralegals.

Lawyers are required to stay up-to-date with legal practices, which change frequently based on new rulings and precedents. This education requirement often entials attending various seminars, workshops, and courses. Fortunately, the expenses attorneys pay for CLE can be tax-deductible.

In many cases, a tax professional may be able to help a client deduct not only registration fees but associated costs such as travel, accommodation, and materials. By documenting these expenses carefully, lawyers can reduce their taxable income while enhancing their professional knowledge.

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Credit: Seksan Mongkhonkhamsao/Getty Images

Home Office Deduction

The rise of remote work has prompted many lawyers to set up home offices. Many attorneys who previously worked in traditional office environments don't realize that home office-related expenses, such as rent or mortgage interest, utilities, and even depreciation, can be deducted if the space is used exclusively and regularly for work.

This deduction can significantly alleviate tax burdens for lawyers who have established a home office. However, there are a number of caveats that the IRS has in place. You can learn more about the federal home office tax deduction here.

Bar Association Dues and Professional Memberships

Membership in bar associations and other legal professional organizations is essential for networking, skill enhancement, and staying informed about legal developments. In many cases, the fees associated with these memberships are tax-deductible. Lawyers should keep careful records of their annual or monthly payments to take advantage of this often-overlooked deduction. A tax expert will be able to help you determine which payments can be legally deducted and which cannot.

Lawyers typically spend money on subscriptions to legal publications, such as law journals, and other research materials throughout the course of a year. Often, these costs can be claimed as tax deductions. However, it is imperative for attorneys who are interested in deducting these types of fees to keep track of receipts and invoices. Proof of purchase will be necessary at tax time.

Certain expenses incurred on behalf of clients, such as court filing fees, travel, and research costs, may be eligible to be treated as tax deductions. While these expenses are necessary to win a case, lawyers might not be aware of their potential to reduce their tax liability. 

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Credit: Jirapong Manustrong/Getty Images

Navigating the complexities of the legal profession can be a challenge, even for the most seasoned legal specialists, and lawyers often dedicate their energy to ensuring their clients' success. It is important for these professionals to also look out for their own best interests by optimizing their taxes every year.

Choosing a tax firm that specializes in the legal niche is the best way to make sure you're getting the tax planning help you need as an attorney.

Feature Image Credit: Maskot/Getty Images

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Earl B.  Shanken

Earl B. Shanken

Earl B. Shanken has been a CPA in Arizona for over twenty years. After completing his bachelor's degree in accounting at the University of Arizona, he worked in public accounting in the Phoenix area. Eventually he became a supervisor in the small business division of the firm. He started his own business in 1990 with the intent of creating a firm to provide comprehensive services for small businesses. Earl has devoted his time to establishing that type of service for his clients. He has received the Certificate of Educational Achievement in Estate Planning offered through the Arizona Society of Certified Public Accountants. He is a former member of the board of directors of the Chandler Chamber of Commerce and was recently named "Volunteer of the Month".

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