Legal fees associated with discrimination lawsuits are deductible above the line, on the first page of your 1040, to determine your adjusted gross income. However, a few limitations apply here as well. You must be the party who was discriminated against and your lawsuit must have resolved after October 22, 2004. You can't deduct more than the amount you recover in the lawsuit. This deduction goes on Form 1040 Schedule 1 Line 8 and can include court costs as well as attorney fees.
To claim these fees in TurboTax, you can make a negative adjustment on Schedule 1.
- Go to Wages & Income
- Less Common Income
- Select Miscellaneous Income, 1099-A, 1099-C
- Select Other Reportable Income
- Any Other Taxable Income? Select, yes.
- On the Other Taxable Income page: enter description: “Deductible Attorney Fees”
Amount: enter in the adjustment amount as a negative number.
This adjustment will appear on Schedule 1 Line 8z (reducing Total Income) and is included on the amount on Form 1040 Line 9.
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