No, in this case you can't deduct attorneys' fees. The legal fees you paid for a divorce are considered personal expenses. You can only deduct legal fees related to doing or keeping your work. However, you may be eligible to deduct attorney fees associated with receiving alimony or receiving property.
These charges may be deductible because they will increase the applicant's taxable income. You cannot deduct the costs of counseling, litigation, or personal advice. Can you deduct your legal fees for a divorce, alimony (spousal support), or related expenses? Overall, the Internal Revenue Service (IRS) says no. Here are some rules that can help.
Deducting divorce-related legal fees as alimony for the purpose of getting a state tax deduction may be nice, but there are still bigger tax-saving holes to dig for the tax mole found in the right neighborhood. Also, ask your lawyer to prepare a statement that clearly shows how much of the fees are deductible. In most divorce cases, both parties will hire an attorney and some will seek professional financial advisors or other experts. Prior to the TCJA, a qualified taxpayer could deduct legal fees related to the divorce, provided that such fees were paid for the production or collection of income (for example, obtaining alimony) or obtaining tax advice.
If you pay alimony, it's important to avoid any change in the amount you pay within the first three years of the court order or divorce agreement, or you risk triggering the IRS recovery rule. A taxpayer is “entitled to deductions, including transferred deductions, for the portion of legal fees related to the Liberty Vending, Inc. However, the IRS allows these statutory fees and most other miscellaneous deductions only to the extent that your total in a year exceeds two percent of your AGI, short for adjusted gross income. The information provided on this site does not constitute legal advice, does not constitute a lawyer referral service, and no attorney-client or confidential relationship is or should be formed through the use of the site.
Therefore, for the time being, this hole in the tax code has been filled; but a cunning tax spy can usually find another yard in which to dig. You can deduct 100% of the attorney's fees you incur as a plaintiff in certain types of employment-related claims. For example, if fees are spent for the purpose of protecting a family business, they are still considered personal (Melat v. Specific examples are provided in which legal fees incurred to collect taxable alimony or tax advice related to a divorce are tax-deductible, provided that the bill specifies how much tax-related, and the dollar amount is reasonably determined.
As with the deduction of attorneys' fees for discrimination claims, this deduction is an adjustment to income. However, this is not always the case, and there are many divorced couples who remain shareholders and active participants in the business, because they recognize that, although their relationship as husband and wife no longer works for them, their business partnership is strong and their business really benefits from both being part of it.
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