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Level 2
posted Mar 21, 2023 8:48:33 AM

Can I claim personal loss on legal fees and settlement

Hello, I have filed my taxes this year with Turbotax , 

I had to pay 60k in a settlement and lawyer fees during 2022 , 

how to amend my tax returns to claim this amount as loss?

I have paid a settlement for being sued plus the legal fees for my personal attorney , so it was a personal loss , 

I was the guarantor of a lease for a commercial property, I sold the business in 2015 , then the buyer broke the lease in 2020, the landlord sued all parties including me , that’s why I had to pay the settlement in 2022

 

thank you 

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1 Replies
Expert Alumni
Mar 21, 2023 9:21:32 AM

It depends on many factors.  And it's important to be sure if any of this is a repayment of income that was taxed in an earlier year which is called a 'Claim of Right' in tax terms.

A deduction and the 'claim of right' are handled completely differently.

 

This link will help you decide if it's a personal loss or a business loss (seems more like this or the claim of right) which also has different ramifications.