It’s a good question, really…
Over at Popehat, Patrick has this to say about Joel Rosenberg’s defense fund:
Note that this is not tax-deductible. The government does not encourage its subjects to stand up for the blameless.
Well, why the hell not?
As far as I can tell, the tax rule for legal expenses is that the expenses are tax deductible only if they are business or income related. Criminal defense is considered neither, so criminal defense fees are not tax deductible. Which is kind of odd when you consider that it’s pretty hard to earn a living if the government throws your ass in jail.
Also, the need for criminal defense arises from the government’s own legal actions. It seems cruel to force the defendent to pay taxes to the government for the cost of defending himself from that same government.
Of course, if you do try to deduct your criminal defense fees, and the IRS comes after you, your tax defense expenses are tax deductible.
I’m a registered tax preparer in California.
If you really want to be able to deduct the expenses, then sue your persecutors (pun intended) for money damages alongside whatever criminal case is pending. So long as the judgment you are attempting to collect would be taxable income, the part of attorneys’ fees and expenses that apply to the lawsuit are deductible.
I don’t know who the heck you are, John Galt, but thanks for the information.