David19761976
Returning Member

Legal fees for LT Disability Claim Denial

Attorney fees for long term disability claim

In 2024 my wife received a settlement from her insurance company for their denial of a long term disability claim.  The policy was employer sponsored.  Both her and her employer shared in paying the premiums.  Her portion was paid with pre-tax deductions from her payroll check.  We hired a long disability law firm to fight their denial of her claim.  The insurance company eventually paid a $75,000 settlement, which was paid directly to the law firm.  The law firm kept $30,000 for attorney fees and sent us a check for $45,000.  The insurance company sent my wife a W-2 for the full $75,000.  The law firm sent no tax documents to her.

 

We plan record the W-2 for the $75,000 of income.  My question is, can we deduct the $30,000 of legal fees on our joint tax return?  If yes, how do we record this in turbo tax.