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Can You Write off Fines and Penalties? [Video]

Can You Write off Fines and Penalties?

§ 162(f) of the tax code says you can’t get a tax deduction for fines or penalties paid to a government or governmental entity for a violation of the law.

Thus, if you own a trucking company and get traffic tickets for speeding, you can’t deduct the cost of the traffic tickets.

You could deduct any legal costs if you chose to fight the tickets in court.

But fines and penalties are nondeductible.

There are several exceptions, however.

§ 162(f)(2) allows you to deduct amounts paid:
• For restitution
• For remediation
• To come into compliance with the law

Thus, if a business gets hit with a $50,000 fine for polluting and it has to pay $30,000 for environmental remediation, the business could deduct the $30,000 for remediation but not the $50,000 fine.

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