Legal and court fees related unlawful discrimination up until tax year 2021 were a right in adjustment of schedule 1, by entering the information on the 1040 worksheet and coded "UDC". Starting tax year 2021 this was actually included as a line item on Schedule 1 line 24 box h and last year it worked properly. This year (I have a download home and business TT program) this line item still exists on Schedule 1, but TT will not allow you to enter this information on the 1040 worksheet unless you select override and in doing so although the amount transfers to the correct line in Sch1 and also flows to the correct area on my state taxes (CA540 adjustment) because override was chosen the amount is not included in turbo tax calculations so it as if you didn't even add it. If you do as you have mentioned in your posting as a work around it does work and the legal fees are deducted from gross income, but because the amount is entered in the wrong location on the tax forms and this will result in the IRS/State sending you a tax notice because it was done incorrectly. I am uncertain why Turbotax is not working correctly this year, as I mentioned legal fees and court costs related to unlawful discrimination are considered an "above the line" deduction to gross income and should be reported as an adjustment on schedule 1 line 24h and as an adjustment to income on state taxes; therefore, this appears to be a glitch in the turbotax program this year.
