Can I Deduct Legal Fees

Anyone who has been to court knows that it isn’t the cheapest experience. Between lawyers fees, court fees, and transportation to and from the courthouse, you could end up spending a pretty penny just to win your case. But contrary to popular belief, there are certain situations in which you can deduct your legal fees from your taxes and get some of your money back.

Can I Deduct Legal Fees?

The answer is yes — as long as the legal action is used to produce or collect taxable income or determine or obtain tax returns. To put it more simply,  if you're using an attorney to gain money that will be taxed, you can deduct the fees you pay your lawyer.

What Would Qualify As An Example?

Certain Cases Of Divorce

If you ask a lawyer for advice on how to determine who will be deducting your mortgage from his or her taxes, since that would make you money, you can deduct the lawyer’s fee in your taxes. Just make sure your lawyer notes the difference between his or her tax-related and non-tax related fees.

Collection of Alimony

Let's say your ex-spouse has failed to pay you alimony that you are owed. If you hire a lawyer to help you collect those dues, you can deduct their fees in your taxes since you are gaining income that will be taxed on its own.

Job Income Disputes

If you hire a lawyer for a workplace dispute, such as discrimination or unlawful termination, you're using that lawyer to collect income, and therefore can deduct his or her fees.

Still not sure if you can deduct your legal fees? Let the team at American Investment Planners LLC been your resource this tax season. We have experienced many of the same situations our clients have, so we know exactly what solutions to offer. For more information about our tax planning services, please visit us on our website or give us a call at (516) 932-5130.

*Cadaret, Grant and its representatives do not provide tax or legal advice. Tax advice provided solely by American Investment Planners LLC.