Tax Season: Deductible Attorney Fees

With tax season here, we all start thinking about taxes. What deductions can we take? The IRS considers that some attorneys’ fees for divorce actions are deductible.

The Miscellaneous Deductions publication by the IRS explains legal deductions you can take. A basic guideline to follow in deciding whether a legal service is tax deductible is as follows:

Did you consult with an attorney for tax advice?

Did you hire a lawyer to help you obtain taxable income?

Did your lawyer represent you in an issue involving the IRS?

If you can answer, “yes,” to the above questions, then it’s likely you can deduct the legal service.

In regards to divorce, here are some examples of services that are typically deductible:

Your lawyer represented you in a legal action against your ex-spouse to obtain spousal support.

Your lawyer gave you advice by collaborating with an accountant on how to minimize taxes in your property division.

Your lawyer helped you with a will and did probate planning that would minimize estate taxes and other taxation in the event you pass away and your family members become the beneficiaries of your estate.

Your attorney helped you deal with dividing retirement assets as part of your divorce action.

With billing, ask your attorney to itemize services that are deductible so you can keep records of them for tax returns.

Follow closely what your attorney indicates as deductible and consult with your accountant. C.E. Borman & Associates works closely with clients in divorce along with wills and probate actions.

 

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