Today TaxMama hears from Steve in Massachusetts who asks, “Can a federal criminal fine of $60,000 be tax deductible?”
Wow! Steve, that’s some fine!
I hesitate to ask what you or your friend did to earn that.
But, sorry Steve – nope.
Fines of any kind are never deductible – federal, state, local, etc… parking, traffic, tax return penalties….etc. None.
However, in yesterday’s CSEA breakfast meeting we were discussing lawsuit settlements in employment suits.
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And one of the gurus suggested that a $230,000 settlement (or so), which included $60,000 worth of fines, would be fully deductible as a business expense.
The rationale? It was a cost of doing business.
The difference? It wasn’t a criminal penalty.
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It was a civil penalty.
On the other hand, truckers and drivers who regularly get parking and speeding tickets are not permitted to deduct their fines, even though, for them, it really is an inevitable part of doing business.
A case for the business fines? The traffic fines are from government.
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The employer’s fines are still strictly a civil issues – they’re paid to employees.
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Regardless,…proceed with caution when it comes to deducting fines.
Remember, you’ll find answers to questions about fines and penalties and all kinds of tax issues, free.
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Where? Where else? At TaxMama.com
- Ask TaxMama :: Where taxes are fun and answers are free
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