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Washington Tax Law Questions & Answers
3 Answers | Asked in Divorce, Tax Law and Family Law for Washington on
Q: Can I withdraw 401k funds for divorce legal fees, and are there penalties or taxes?

I am considering withdrawing funds from my 401k to pay for legal representation and legal fees related to my divorce. I am no longer an employee at the company that holds my 401k. I'm exploring if this is possible and what penalties or taxes might apply. Are there any regulations or... View More

Andrew J. Wyman
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answered on May 23, 2025

If you take money out of your 401(k) to pay for divorce legal fees, you’ll have to pay regular income tax on the amount you withdraw. If you’re under age 59½, you’ll also have to pay an extra 10% penalty to the IRS. Unfortunately, there’s no exception to this penalty for legal fees related... View More

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3 Answers | Asked in Divorce, Tax Law and Family Law for Washington on
Q: Can I withdraw 401k funds for divorce legal fees, and are there penalties or taxes?

I am considering withdrawing funds from my 401k to pay for legal representation and legal fees related to my divorce. I am no longer an employee at the company that holds my 401k. I'm exploring if this is possible and what penalties or taxes might apply. Are there any regulations or... View More

Yatong (Cecilia) Ju
Yatong (Cecilia) Ju
answered on May 23, 2025

Yes, you can withdraw funds from your 401(k) to pay legal fees, especially since you're no longer employed by the sponsoring company. However, unless you're over 59½ or qualify for a specific exemption, the withdrawal will be subject to income tax and a 10% early withdrawal penalty.... View More

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2 Answers | Asked in Real Estate Law, Tax Law and Estate Planning for Washington on
Q: Selling home to daughter and living there: legal and tax implications?

I am considering selling my home to my daughter and continuing to live in it. What are the potential legal and tax implications for both me and my daughter? Would selling the house and then paying rent to stay there be a viable option?

Andrew J. Wyman
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answered on Apr 1, 2025

This question raises many issues. First, whether the exclusion applies to minimize capital gains tax on the transaction. There are requirements.

Secondly, if the property is sold for less than its fair market value, part of the transaction might be subject to gift tax implications....
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2 Answers | Asked in Tax Law, Consumer Law and Contracts for Washington on
Q: Can a car dealership demand more money after purchasing a car due to “tax miscalculations”?

Hi! I live in Washington state. I bought and shipped a car from Illinois, and they correctly charged me the Washington state taxes and fees for the car. I financed the car, which out the door cost $37.7k before any down payment. Now, about 2 weeks after buying the car, the dealership called me to... View More

Merry A Kogut
Merry A Kogut
answered on Dec 23, 2024

This situation raises important questions about contract law and your rights as a consumer in Washington State. Here’s an analysis:

Key Legal Considerations

Binding Contract:

The purchase agreement you signed with the dealership is a legally binding contract. It should...
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1 Answer | Asked in Business Law and Tax Law for Washington on
Q: A Law that Employers of a 1099 IC, must give the IC access to all tax related info, including mileage information?

I need certain address from Rover to complete my records for my mileage on taxes. Rover closed my inbox so I can not see the corresponded clients with address to complete my mileage record. Is there any law that says Rover has to give me all the available info for me to complete an accurate tax... View More

James L. Arrasmith
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answered on Apr 8, 2024

As an independent contractor (1099), you are responsible for keeping accurate records of your business expenses, including mileage driven for business purposes. While there is no specific law that requires companies like Rover to provide you with all the necessary information for your tax filing,... View More

Q: Disabled person selling a house to move oversea - consequences?

My parents live in Washington state, and my mother is disabled receiving SSDI and long term care service where a caregiver comes to her house every day. They live in a house they jointly own, no mortgage. They're both seniors, and now they miss their home country, so they decided to move back... View More

James L. Arrasmith
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answered on Mar 29, 2024

Selling a house and moving overseas can have several implications for your parents, particularly regarding their Social Security Disability Insurance (SSDI) and Medicaid benefits. First, it's important to note that SSDI benefits are typically not affected by the sale of a primary residence or... View More

1 Answer | Asked in Divorce, Tax Law, Banking and Collections for Washington on
Q: Me and my ex husband share a house. He went to prison and owes court fees and lawyer fees. Will I lose my house?

I want to keep the house, but I don’t want them to take the whole house from me since he doesn’t have money to pay them off.

James L. Arrasmith
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answered on Feb 28, 2024

When you co-own a house with someone who incurs significant debts, such as court fees and lawyer fees, there is a risk that creditors might target the property to recover what is owed. However, the extent to which your house is at risk depends on several factors, including how the property is... View More

1 Answer | Asked in Employment Law, Tax Law and Business Law for Washington on
Q: Can my company pay me my 401k balance via extra hours worked on my checks?

For 1 year I got 60-90hrs extra on each check I figured it was them paying out stocks do to the company being sold and changing from employee owned to non, I just got a letter that states my 10k I had in my 401k is now at 0.00 this is the first mention of my 401k I have received

James L. Arrasmith
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answered on Jan 26, 2024

In addressing your question, it's important to understand that 401(k) plans are subject to specific regulations under the Employee Retirement Income Security Act (ERISA). Generally, these plans are not designed to be paid out through extra hours worked or through your regular paychecks. Such... View More

1 Answer | Asked in Business Law, Immigration Law, Tax Law and Gov & Administrative Law for Washington on
Q: Requirements for W-2 or 1099 while working remotely in Spain?

I am a part-time W-2 employee working remotely in the US. I plan to study for a 10-month masters program in Barcelona, Spain, where I'll have work authorization under a student visa for up to 30 hours a week.

I understand that I can keep my job as a W-2 employee if I obtain a... View More

James L. Arrasmith
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answered on Jul 8, 2025

If you remain a W-2 employee while living in Spain, your U.S. employer may continue withholding U.S. payroll taxes, but risks triggering a permanent establishment issue under Spanish law. To reduce liability, your employer should secure a Certificate of Coverage (via SSA Form 8809), which exempts... View More

2 Answers | Asked in Tax Law, Estate Planning and Real Estate Law for Washington on
Q: Can we claim $250k capital gains exclusion on a house we inherited and improved?

My brother and I inherited a house from our mother alongside two other siblings, valued at $105,000 by the courts at the time. About 20 years ago, we bought out our other two siblings for $25,000 each, and we became the sole owners via quitclaim. We've lived in this house for over 25 years as... View More

Merry A Kogut
Merry A Kogut
answered on Jun 27, 2025

Hello - I am not a tax attorney, but have bought and sold a lot of real estate and love this area of the law....so, please take what I have to say with a grain of salt.

First off - add everything you can to the basis of the house - this would include the basis of the house when you and...
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1 Answer | Asked in Business Law and Tax Law for Washington on
Q: What are the implications of paying staff in a nonprofit in WA?

I started a nonprofit organization last October, and currently, there are no paid positions. As the founder and president, along with the vice president, we manage the organization. We are considering introducing monthly stipends for one or both of us. I'm seeking legal guidance on several... View More

James L. Arrasmith
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answered on Jun 13, 2025

Starting to pay yourself or others in a nonprofit is a big step, and it's smart that you're asking these questions up front. Legally, nonprofits can compensate board members and officers, but payments must be reasonable, well-documented, and tied directly to the work being performed. The... View More

1 Answer | Asked in Divorce, Business Law, Tax Law and Family Law for Washington on
Q: Are pre-marriage investments separate property in WA divorce?

I am currently married in Washington State, which is a community property state. I would like to know if stocks, mutual funds, and 401(k)s that I held before marriage remain my separate property. I have no prenuptial agreement, and although some investments have changed in value, all dividends... View More

James L. Arrasmith
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answered on May 15, 2025

In Washington, property owned before marriage is typically considered separate property, even in a community property state. So, if you had stocks, mutual funds, or a 401(k) before getting married, the original assets are usually treated as yours alone. However, things can get more complicated when... View More

1 Answer | Asked in Employment Law and Tax Law for Washington on
Q: Can taking a part-time job affect my full-time employment due to non-compete clause and tax records?

I am currently working full-time and considering taking on a temporary part-time retail job. My employment agreement includes a non-compete clause and mentions avoiding conflicts of interest, but I didn't see anything explicitly prohibiting secondary employment. I have ensured that there will... View More

James L. Arrasmith
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answered on Apr 11, 2025

Taking on a part-time retail job while working full-time isn't automatically a problem, especially if the second job is in a completely different industry and doesn't compete with your primary employer. Since your current agreement includes a non-compete and conflict of interest clause,... View More

1 Answer | Asked in Tax Law for Washington on
Q: Can I take earnings out early from a Roth IRA without penalty if I run out of savings and I’m not making enough money?

I got divorced in 2023, and because my ex spouse bought me out of our house, I got a large amount of money. At the time, I was finishing my masters degree. I used some of the money to pay off my student loans so I wouldn’t have any debt. I continued to live off the rest of it while I finished... View More

James L. Arrasmith
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answered on Feb 8, 2025

Taking earnings out of a Roth IRA before age 59½ usually comes with a 10% penalty and taxes, unless you qualify for an exception. Since you’ve already withdrawn your contributions, any additional withdrawals would come from earnings, which are subject to these rules. Unfortunately, financial... View More

1 Answer | Asked in Tax Law, Real Estate Law and Elder Law for Washington on
Q: I am 80 and own my home through a revocable trust that I created 15 years ago. Can I qualify for the property Tax deduc

My income is fixed and below $40K

Another question is if I am eligible to have prorated for previous years for a possible refund?

I am 80 years old, house is set up in a revocable trust I had done many years ago, I live in the house year round with my spouse of 50 years, I am up to... View More

James L. Arrasmith
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answered on Jul 18, 2024

You may qualify for property tax relief in Washington State, as it offers several property tax exemption and deferral programs for senior citizens, especially those with low fixed incomes. Given your age and income, you could be eligible for the Senior Citizens and Disabled Persons Property Tax... View More

1 Answer | Asked in International Law, Securities Law, Tax Law, Banking, Business Law and Military Law for Washington on
Q: I need a lawyer to help run an international bank that provides services to countries and individuals globally

While serving as a special operator in the United States military and using the bank to assist my career covertly

James L. Arrasmith
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answered on May 11, 2024

My recommendation would be to only engage in lawful and transparent banking and financial practices. If any of the international banking services you are looking to provide could be used to secretly finance military or intelligence operations, you should refrain from offering those services. A... View More

1 Answer | Asked in Business Formation, Business Law, Contracts, Tax Law and Estate Planning for Washington on
Q: My dying mother wants to leave her art business to me, she wants me to continue sell her branded art for her

What must I do legally?

She wants me to continue on her brand and artwork selling.

James L. Arrasmith
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answered on Sep 14, 2023

To legally handle your mother's request, you should:

1. Ensure she has a valid and comprehensive will or trust that clearly outlines her wishes for the art business's succession.

2. Work with an attorney experienced in estate planning to facilitate the transfer of assets...
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2 Answers | Asked in Tax Law for Washington on
Q: Used Plugin hybrid rebates

Can I apply for Fed credit for buying a qualifying Hybrid Im retired on SS with small pension and dont have to file taxes - Thx

T. Augustus Claus
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answered on Aug 31, 2023

If you are retired on Social Security with a small pension and are not required to file taxes, you might still be eligible for the federal tax credit for buying a qualifying plug-in hybrid vehicle. The federal tax credit is often claimed when you file your federal income tax return. However, since... View More

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1 Answer | Asked in Tax Law for Washington on
Q: So is it illegal for a tax preparer to knowingly change the amount of a w-2 form? Example I paid 171.21 changed to 171.

So on over 40 w-2 forms to save time he reprinted all my w-2 to say the amounts without the change on the papers and kept the originals and gave me the copy he made.

John Michael Frick
John Michael Frick
answered on Feb 5, 2023

Rounding to the nearest whole dollar is standard practice. DIY forms automatically do this for you.

1 Answer | Asked in Family Law and Tax Law for Washington on
Q: What can you do if your divorce papers say you can claim your child odd years and your ex disregards this and claims her

His ex is saying it’s whoever filed first gets to claim her but the divorce papers state she gets even years and he gets odd years

Laura Helen Fitzgibbon
Laura Helen Fitzgibbon
answered on Mar 6, 2022

You can bring them in for a contempt hearing for violating the child support order. In your declaration, I’d attach the email or text messages where your ex made these statements. Please reach out if you need representation!

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