As we barrel into 2018, many financial advisors are fielding calls about year-end tax implications for their clients. Not only on what deductions to squeeze into 2017 but on how the recently-passed Republican tax plan (calculator here) may affect their taxes for next year versus this year.
Prudent financial advisors considering expungement or other legal/arbitration services may want to take a moment to review their own tax implications as well in the coming days.
If you received income via 1099 as a sub-contractor (Schedule C), you may likely have the ability to deduct expenses for expungement cases directly as a legal expense.
Alternatively, if you are an employee paid wages via W-2, then you may be able to itemize your legal expenses (Schedule A) if it's for matters that help you produce income. You can learn more from IRS Publication 529 on the tax limits involved (2% of AGI). Obviously, you should always consult your tax accountant for a final say.
With the recent proposed rule changes from FINRA looking to shut the door on expungement, as well as the possible tax advantages given the new plan, it's imperative for advisors to take a little time this week to ensure they are spending their own money wisely.
This blog is our ongoing effort to inform and educate FINRA licensed professionals about the evolving regulatory ecosystem in which we operate.