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Ed Johnson
Ed Johnson, Tax Preparer
Category: Tax
Satisfied Customers: 10760
Experience:  GPHR Cert; U.S. Treasury Tax Advocacy Panel appointee
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I am on parole and pay a monthly fee to the state for supervisory

Customer Question

I am on parole and pay a monthly fee to the state for supervisory charges, electronic monitoring and the such. Are these charges tax deductible as they are substantial and required?
Submitted: 5 years ago.
Category: Tax
Expert:  Ed Johnson replied 5 years ago.

DearCustomer

 

Thank you for your question.

 

I need to known if

 

1. you are billed for these expenses?

 

2. ARE you ordered to pay them by the court?

 

 

 

Customer: replied 5 years ago.
I was in prison in the state of RI and moved to FL. The parole officer presented me with a list of monthly charges to be paid over the duration of my supervisoin.

So are they ordered by the court? - No - because if I resided in another state I would not have to pay what I am paying and I never went to court in FL.

Am I billed for these ? In a fashion I am as my account reflects charges of ~$300 / month. Does that help? If you want you can call me for more info.
Expert:  Ed Johnson replied 5 years ago.

DearCustomer

 

Based on what you are saying, the requirement to pay comes from the statute and is legislated. Many parole programs are that way.

 

These are not deductible as legal expenses.

 

In order to be deductible these would have to have been incurred as a result of business activity as business expenses, or as legal fees related to business income or activity.

 

For example, on a personal level, if a person incurs legal expenses to protect his wages or job, then those legal expenses become deductible.

 

In a nutshell, if these expenses do not fit into the definition of business or employee expanses, or legal expenses, then they are personal. Personal expenses are not deductible.

 

From the IRS website:

Amounts paid for legal and other professional services may, depending on the factual circumstances and the ability of the taxpayer to meet the applicable legal requirements for deduction, have the following tax consequences: (1) a deductible expense or as one of the three categories of deductible nonbusiness expenses: (2) a personal expense which is nondeductible; (3) a capital expenditure which is nondeductible, but which may be subject to depreciation or amortization; (4) a deductible loss; or (5) a combination of the foregoing.

 

I asked about the court order because if this was ordered by the court to a victims compensation fund or was order for reimbursement of wages (ordered by the court), then we could have related these could have been deductible.

 

But as it stands, these unfortunately are not deductible, because they are personal expenses.

 

I suppose, one might attempt to argue that paying these fees keeps you in an active parole condition, making you eligible for work. BUT such expenses are also not deductible. For example: aliens who apply for work visas in order to work, are not allowed to deduct visa fees....because such work qualifying activities are not deductible.

 

The U.S. code (I.R.C) does not specifically mention many deductions and non-dedutable expenses. This opens the door for wide interpreation.

 

This means you can request a private letter ruling in your case, to allow the deductions.

 

You can do this two ways. (1) you can claim them anyway, and then deal with them on appeal. (NOTE RECOMMENDED, because it would open the door on a audit of your entire return, and it is my opinion it would be denied.) OR

 

(2) file your return without claiming them (RECOMMENDED). And submit a request for a letter ruling. If they rule in your favor, you can then file amended returns to claim the additional refunds.

 

NOTE: at 300 a month, that is 3600 dollars a year. That is less than your standard deduction. So unless you had other significant deductions, even if you could claim this 3600 dollars, it would not do you any good.

 

The new standard deduction is $10,900 for married couples filing a joint return (up $200), $5,450 for singles and married individuals filing separately (up $100) and $8,000 for heads of household (up $150). Nearly two out of three taxpayers take the standard deduction, rather than itemizing deductions, such as mortgage interest, charitable contributions and state and local taxes

 

So if you were single, your iteminzed deductions would have to total 5451 dollars before you would see your fist dollar of deducton benefit. That first dollar would only net you about 15 cents in additiona tax refund.

Ed Johnson, Tax Preparer
Category: Tax
Satisfied Customers: 10760
Experience: GPHR Cert; U.S. Treasury Tax Advocacy Panel appointee
Ed Johnson and other Tax Specialists are ready to help you
Expert:  Ed Johnson replied 5 years ago.

DearCustomer

 

You can read about the private letter ruling process here:

 

http://www.irs.gov/faqs/faq/0,,id=199552,00.html

 

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