Are Lindsay Lohan's Legal Fees Tax Deductible?

Illustration for article titled Are Lindsay Lohan's Legal Fees Tax Deductible?

After not paying income taxes in 2009 and 2010, Lindsay Lohan owes almost $250,000 to the IRS, which she apparently cannot afford to pay. Sadly, her finances mirror her career and personal life in that they're a complicated mess that ultimately stem from bad parenting. But her seemingly never ending legal troubles could ironically save her some money.


As a 26-year-old woman, Lindsay is obviously responsible for own life and poor decisions, but those decisions were undoubtedly informed by the example given to her by her parents, who have notoriously been involved in her career and money. According to public records, they bungled her New York State income taxes when she was 13 and again when she was 17, causing liens of nearly $10,000. Her father, Michael Lohan, was chased down by the IRS and the state of New York in 2010, 2011, and 2012 for over $35,000 in unpaid taxes. Her mother, Dina, is in about $1.3 million of debt involving a tax lien as well as civil judgments for unpaid bills and defaulting on her mortgage.

Lindsay had reportedly helped her mother avoid foreclosure by giving her $40,000. A person can give up to $13,000 to another person, tax free. Anything beyond that would cause Lindsay to pay gift tax. Or Dina would have to pay income tax on it. Neither women seem to be in the financial shape to add to their tax bills, which is perhaps why Lindsay began calling the bail out a loan. It was at the center of a much-publicized altercation between the mother and daughter.

Likewise, the $100,000 that Charlie Sheen benevolently bestowed on Lindsay earlier this week could be taxable income for her—up to $35,000—unless he is willing to pay gift tax.

But there is a silver lining to her complicated money problems. Her undoubtedly large legal fees—for various criminal charges and lawsuits filed against her in 2012 alone—could be tax deductible, according to Forbes. Celebrities who are involved in high-profile legal cases can write-off their lawyer's fees as a business expense, because they are defending not just themselves in court, but their public image, from which they earn a living. Charges and lawsuits that threaten their reputations would qualify. Of course, at this point, it's questionable whether Lindsay Lohan even has a reputation left to damage.

Lindsay Lohan's Thelma & Louise Crime Spree Trumps Tax Claims [Forbes]



It's hard for me to understand how Lohan can be in this type of money trouble. Or really any celebrity. She has expensive cars, jewelry, and wardrobe, not to mention she must be living somewhere.

Why not just sell the jewels, downsize the house, pay the tax bill and be done?