To deduct legal fees, you must itemize deductions on Schedule A,
and the sum total of your miscellaneous deductions including your legal
fees must exceed 2% of your Adjusted Gross Income.
Given the above limitations you may not be able to benefit from
your legal expenses.
To enter legal fees:
Type in legal expenses, deduction the search box, top right of
your screen, then click the magnifying glass
Click the jump to legal expenses, deduction link in the search
results
Follow to prompts and online instructions
To report the income. type in lawsuit settlement in the search box and follow the above instructions.
