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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