For federal income tax purposes, legal fees are no longer deductible. The Tax Cut and Jobs Act of 2018, disallowed miscellaneous itemized deductions for the period 2018-2025. That includes personal legal fees, including legal fees incurred in the production of taxable income. i.e. Social Security.
However, you may include them and TurboTax will transfer the amount as a deduction on your state income tax return, if your state allows it.
To enter:
- Type legal expenses, deduction in the search or find box, click search.
- Click on Jump to legal expenses, deduction.
- Continue with the onscreen interview until complete.
In general, only legal fees that are related to your business, including rental properties, can be deductions. This is true even if you didn't win the legal case in which the legal fees were incurred.
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