Deduct attorneys fees

Forum|Forum|7 years ago
June 6, 2019
5 replies
20 views

I received a judgement settlement in 2017. I did not write off attorneys fees in the year the judgement was awarded because there were many appeals. Can I file an amended return to write them off in the year they occurred and am I limited in what amount I can write off? In other words, can I write off more than I recovered?

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PatriciaV

Level 15

It depends. You can report allowable legal fees in the tax year for which the fees were paid. If allowable, there is no limitation.

You can usually deduct legal expenses that you incur in attempting to produce or collect taxable income or that you pay in connection with the determination, collection, or refund of any tax. Legal Fees of this type are included on Schedule A as a Miscellaneous Itemized Deduction, subject to a 2% limitation based on your Adjusted Gross Income.

Legal fees associated with discrimination lawsuits are deductible above the line, on the first page of your 1040, to determine your adjusted gross income.

Other legal fees are not tax-deductible.

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bengelking2Author

Level 2

We were really not attempting to produce income but we did receive a judgement. The judgement was granted in 2014, but then there were appeals so we did not get paid until 2017. In addition, they had gotten a judgement against us, so the final settlement had those offsets plus interest paid and interest earned. The pipeline company did not issue us a 1099 either. But the check was written on their right of way account.