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…More Tax Tips…

October 30, 2012

Many times clients will call towards the end of the year and ask us what can I do as I think I made too much money and don’t have enough write-offs. My first reaction is how can anyone (especially in today’s economy) make too much money. I always caution them by saying “no you want to make too much money, you just don’t want to pay too much tax.” When you are a client of Gunwel Associates you are able o have mini returns done through-out the year to see exactly where you are  liability wise…and of course there is no charge for that service. But we always like to strategize on how your financial picture can be better and share various tax tips that may apply to you. Here are a few to consider.

  • Legal fees re martial actions: As a general rule, attorney’s fees in marital and custody actions are not deductible. This is so even if marital assets include a business or investment property. If legal fees are for tax advice, they are deductible. Also, legal fees paid to protect a certain asset may be added to basis. It is important for the attorney to separately bill for such services. Child support and property settlements incident to a divorce are non-taxable, so related attorney’s fees are non deductible.
  • Legal fees re social security claims: Attorney’s fees to establish a claim to Social Security benefits, (e.g., to qualify for disability payments) are deductible to the extent that the benefits are taxable. Depending on income, up to 85% of benefits may be taxable – so that portion of the fees may be deductible as a miscellaneous itemized deduction.
  • Legal fees re criminal actions: Generally, attorney’s fees to defend oneself in a criminal matter are not deductible. For example, fees to mount a Racketeer Influenced and Corrupt Organizations (RICO) Act defense are not deducible even if an adverse determination results in forfeiture of property under the law. However, if the case arises in a business context, the fees may be deductible.
  • Summer day camp can provide a tax credit: If your child attended day camp this past summer, the expense paid may qualify for a tax credit. The credit may be as high as 35% of qualifying expenses. The maximum amount of expenses that can qualify for the credit is $3,000 for one child ($6,000 for two or more children). The general rule for eligibility is that both parents must work or be full-time students and show that it is necessary to provide child care for a child under age 13 at the time the expenses are incurred. The credit is phased down according to the taxpayer’s adjusted gross income.

So there you have it, some relatable tax tips that may help in this upcoming tax filing year. Give us a call at 615-730-9444 if you have any questions at all as we are here to help. Our website at is full of information that can also help you minimize your tax liabilities. Remember, you work hard for your money, let Gunwel Associates work smart to help you keep it. See you Soon!

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