Are Divorce Attorney’s Fees Tax Deductible?

In our previous post, we talked about filing taxes during a divorce. One question that we didn’t answer in that article was, “Are attorney’s fees tax deductible?” The answer is both yes and no, because it depends on what type of attorney’s fees are being considered.

Generally speaking, the basic rule is that you can deduct attorney’s fees you pay to:

• Produce or collect taxable income
• Help determine, collect, or obtain a refund of any tax

Simply put, you can take a deduction if you need an attorney’s help to make money you’ll have to pay tax on; or if an attorney helps you with a tax matter, like representing you in an IRS audit.
 

What About Legal Fees For Divorce?

Legal fees for divorce are considered “personal legal fees”, and in so being they are not tax deductible.

On the other hand, if you incur legal fees in an attempt to get your former spouse to pay alimony, those fees specifically are deductible because alimony is taxable income.

Finally, any legal fees you and your spouse incur during the divorce process specifically related to tax advice also is deductible. These fees should be listed separately by your attorney(s) on your bill to separate between tax and nontax services.
 

Other Deductible Fees

Besides legal fees for tax advice and to secure alimony, other examples of legal fees that produce or collect taxable income and therefore qualify for a tax deduction include:

• Tax advice your attorney gives when formulating an estate plan is deductible. Again, make sure your attorney’s bill allocates the fee between tax and nontax services.

 

• Legal fees related to doing or keeping your job. For example, you can deduct attorney fees you pay to defend a lawsuit filed against you on a work-related matter, such as an unlawful discrimination claim filed by a former employee that you fired.

 

• Fees you incur in bringing a discrimination claim–for example, a gender discrimination claim–are deductible.

If you have incurred legal fees and are unsure about whether or not those fees are wholly or partially deductible, consider speaking with a local tax attorney to help guide you through your fees and your tax filing.