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How Legal Matters Affect your Taxes

businessman calculating his business revenue

You do not want to be caught off guard with a large tax bill when tax season rolls around. Knowing how legal matters can impact your taxes will help you be prepared as sometimes legal matters can lead to more deductions and other times you may owe more in taxes.

Most Common Legal Matters that will affect your Taxes

Marriage or Divorce

Getting married or divorced could increase your taxes or give you specific tax breaks. Tax brackets are based on filing status, and divorce usually means that you will no longer be able to file as married. If you get divorced or become widowed, you may have to pay more in taxes ,or you could take advantage of certain tax breaks. For example, you may be able to file as head of household on your taxes. Make sure to consult a WI Alimony Lawyer if this applies to you.

How should I file my taxes if I get married?

Children Custody

If you make changes to a child custody arrangement, you may alter your child tax credit for having dependents. Consult with child support lawyers in Wisconsin to discuss your situation further.

Employment

If you own a business, there are several tax implications that you need to be aware of. As a business owner, you should become aware of the tax laws and understand the implications of being structured as a S-Corp, C-Corp, LLC, or Sole Proprietor. Understanding how your business income is taxed and could affect your personal tax return is important. If you are self-employed, you will also need to pay the self-employment tax which should typically be submitted quarterly. A business attorney can help you navigate potential pitfalls.

What business structure should I choose?

Lawsuits or Criminal Convictions

If you are involved in a lawsuit, you may be able to deduct legal fees that you incur whether you win or lose. If you are convicted of a crime, you may have to pay additional taxes. For example, if you are convicted of tax evasion, you may be required to pay back any taxes that you owe, plus interest and penalties.

Investments, Inheritance, and Gifts

You will need to pay taxes on investment income which includes interest, dividends, and capital gains. If you inherit money or property, you may have to pay taxes on what you inherit as well depending on the amount of the gift and how it was transferred to you. Make sure to consult with an estate planning and tax attorney today. If you give money to charity, you may be able to take a tax deduction for it.

Does An Estate Plan Save Tax Money?

Legal matters can have a significant impact on your taxes. Consulting with a firm that works in a variety of practice areas can help address all your questions.

 

 

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