If you run a law firm, every dollar counts, especially when it comes to tax. Rounding up a year of personal and business expenses can often be tedious and confusing. But you need to make sure you’ve claimed all possible tax deductions for attorneys. Without overburdening and claiming more than you were entitled to receive. So what tax deductions can you claim as an attorney? What tax deductions from law firms should you beware of? So now we will talk about income tax deductions for lawyers for 2020.
Related To Income Tax Deductions for Lawyers:
Income Tax Deductions for Lawyers for 2020
1. Home office expenses
If this includes you, and your main office is your main place of business. You may be able to deduct certain expenses. You will need to determine what percentage of your home is in your office. And then multiply this by the house costs for the year. These include parts of your rent or mortgage payments utilities insurance costs depreciation and repairs.
Another option is to use the safe harbor method, which allows you to claim up to $ 1,500 per year based on $ 5 per square foot up to 300 feet, without the need for calculation. However, if you use this method, you cannot claim the depreciated value of the part of your home used in a trade or business.
2. Advertising, entertainment and promotional costs.
Almost all types of law firm marketing costs are tax deductible – advertisements, print ads, and even table fees can be claimed for boat shipments when filing your tax return. Of course, online advertising is also deductible. Include marketing expenses in your annual budget as part of your company’s accounting process and save all invoices and receipts. If networking is a big part of your promotion strategy, it’s worth noting that you can claim 50 percent of the expenses for food and entertainment.
3. Travel expenses
If you have to travel to work, these costs are tax deductible for attorneys. For example, if you travel a considerable distance to a court you would not normally go to, you may be able to deduct travel expenses. In addition to entertainment expenses, you must ensure that your travel expenses are exclusively for your business. Claiming an attorney-client privilege to reveal the business purpose of your trip didn’t work either.
4. Educational expenses
As a professional, you can deduct the normal educational expenses necessary for your profession. “For example, a lawyer can deduct the cost of attending Continuing Legal Education (CLE) classes that the state bar association requires to license their license to practice law.” For attorneys, you can claim other courses you take or law conferences you attend such as tax deductions for law firms. To make the claim, you will need the education you receive to create “that maintains or improves the skills required in your trade or business.”
5. Books and periodicals
Knowledge is a power for legal professionals: reading the right books can help you execute the best legal practice possible, and with the right legal research materials available you can win cases. Many attorneys are moving their law libraries online, using services like Fastcase or Casetext for legal research. However, if you still have a library with hard copies of legal research materials, they may be deductible. Just as you can claim the depreciation value of your working laptop and / or printer as a tax deduction, you can claim the depreciated value of the books you keep in your legal library.
Before you go, I hope this article income tax deductions for lawyers for 2020 is helpful for you.