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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.