Ah, taxes. They’re like one of those LSAT logic games. If you bought A in year 2 then you can deduct G in year 3. Some people (okay, most people) find this to be a pain in the rear, but for those practiced in the game, they can get away with paying far less in taxes than the novice filer.
For some of you, dealing with taxes is a new thing. You’ve only been open for a short while. These should help. For those of you who have been at this for years, hopefully we’ll at least shed some light on a new or missed deduction.
1. Accounting Fees
That's right - skip this whole mess and hand it off to a CPA. You may be able to deduct the entire thing from your federal taxes as a business expense, saving you from having to ready any more of our posts on taxes! Of course, check with your CPA (chicken and the egg) about the deductibility of his or her fees.
2. Education Expenses
This is definitely a "yes, no, maybe so" sort of situation, but you may be able to deduct the cost of an LLM or CLEs if they are required by your employer (but you employ yourself?) or if it "maintains or improves skills required by the individual in his employment or other trade or business." It sounds like if you are running your own firm and want to take CLEs to improve your performance or get an LLM for the same reason, you can deduct the cost. Tax Girl has a great discussion on the matter. The real question is: can you remain sane while running your own firm and pursuing an LLM?
What kind of lawyer would you be without one of those late night testimonial commercials? Advertising is deductible as a current expense, as are the cost of business cards, print ads, and other create ways to advertise your firm.
4. New Hardware
This is a wee bit complicated, but under Section 179, you can write off a computer system in the first year, instead of splitting it across multiple years, if the cost of the computer is less than the Section 179 annual deduction amount.
5. New Software
Until December 31, 2013, computer software placed into service is also eligible for a Section 179 deduction. Normally, you'd have to depreciate it over a 36 month period.
Taxes, much like booze, are only okay in moderation. We'll hold off on any more talk of deductions, treasury rulings, or obscure sections about depreciation until our next post on tax troubles. Stay tuned - tax day is barely more than a month away!
- Remember You're Free to Deduct Pro Bono Expenses (FindLaw's Strategist)
- Small Firm Startup: Income and Self-Employment Taxes (FindLaw's Strategist)
- Five More Ways to Irritate Opposing Counsel (FindLaw's Strategist)