Turbo tax does not allow me to add civil rights legal fees ?

[MaxA1]

If the legal fees are a business related expense, enter them under the "Legal and Professional" expense line item within the expense section.  TurboTax shouldn't give you any issues by entering it that way.

[hasji]

This answer is unfortunately incorrect for my situation. My legal fees are not business‑related, so they do not belong under “Legal and Professional Services.”

They fall under a completely different IRS category:

Unlawful discrimination / civil rights legal fees

These fees are specifically allowed as an above‑the‑line deduction under IRC §62(a)(20) and §62(e).

✔ Why these fees are deductible

The IRS allows taxpayers to deduct attorney fees paid in connection with:

• Unlawful discrimination claims
• Retaliation claims
• Civil rights enforcement actions
• Fair Housing Act violations
• State civil rights agency filings (such as CRD/DFEH in California)

These are personal legal matters, but Congress carved out a special rule so that victims of discrimination can deduct their attorney fees even if the case is not business‑related.

✔ How TurboTax is supposed to handle it

TurboTax has a dedicated entry path for this deduction:
Federal → Deductions & Credits → Other Deductions → Attorney Fees for Unlawful Discrimination Claims

This is the correct location—not the business section.

✔ IRS guidance

The IRS instructions make it clear that these fees are deductible regardless of whether the case involves a home, HOA, or other personal matter, as long as the underlying claim is unlawful discrimination or retaliation.

✔ My case qualifies

My legal fees are tied directly to:

• A civil rights complaint
• Filed with a state civil rights agency
• Involving retaliation and discrimination
• Under statutes listed in §62(e)

Therefore, they meet the IRS definition and should be entered under the Unlawful Discrimination section, not as business expenses.

the turbo software has a problem!!!!

[SusanY1]

TurboTax does not have a specific entry section for this type of deduction. 

A workaround to get the income subtracted above the line would be to enter this in the Income section, as other reportable income with a negative amount that corresponds to the fees.  

To enter this go to Wages & Income, then to Miscellaneous Income.  Here look for the category "Other reportable income". Provide a description (such as UDC legal fees) and enter the amount in the format -$XX,XXX.  

This will allow you to get to the correct taxable income result. 

[hasji]

Hi Susan,

Thank you for the response, but your guidance is not correct for this category of deduction, and it risks producing an inaccurate return.

Civil rights legal fees are specifically listed in IRC §62(a)(20) and §62(e) as above‑the‑line deductions, not miscellaneous itemized deductions and not “negative income.” They are treated as adjustments to income, not as reportable income offsets.

Using “Other reportable income” with a negative number is a workaround TurboTax sometimes suggests for miscellaneous adjustments, but it is not appropriate for statutory above‑the‑line deductions that Congress explicitly carved out.

There are three major problems with the workaround you suggested:

1️⃣ It misclassifies the deduction

Entering legal fees as “negative income” does not place them in the correct statutory category.
Civil rights legal fees are not income adjustments by analogy — they are income adjustments by law. Misclassification can affect IRS matching and audit trails.

2️⃣ It bypasses the required Form 1040 line treatment

These fees belong on the line for “Attorney fees and court costs for unlawful discrimination claims.”
TurboTax failing to provide the correct entry field is a software limitation, not a change in the law.

3️⃣ It may cause IRS processing issues

The IRS expects these fees to appear in the correct adjustment category.
Entering them as negative income can trigger:

• mismatch flags
• questions about unreported income
• requests for explanation

A workaround should never create a compliance risk when the law is clear.

✔️ Correct Principle

Civil rights legal fees are above‑the‑line deductions by statute, and TurboTax should provide a proper entry path.
A workaround that reclassifies them as “negative income” is not a legally accurate substitute.

Turbo tax experts over the phone don’t even know what I am talking about . The software program lacks this feature . There is no solution expect go somewhere else.

[SusanY1]

I do understand your concern and desire to report this in the most technically correct manner.   The IRS will allow the adjustment as reported in the manner I suggested , but we want you to be comfortable and confident in the return that you prepare. 

Our online product does not support the above-the-line deduction of legal fees, but our downloadable desktop product does - when the adjustment is made via the "Forms mode" of that product.  This means that while the question will not appear in the interview, you can switch modes in this product to enter the adjustment directly on the tax form.  

You can find the downloadable product HERE.  If you wish to go this route, here are the steps to enter the adjustment once you've otherwis...

1. Click on the Forms icon in the upper right of the program.
2. Locate Schedule 1 in the forms list on the left.  If the form is not there, select "open form" and type in Schedule 1 to add it.
3. On the initial image of Schedule 1, double click the box beside Line 24z - this will open the Other Adjustments to Income Smart Worksheet
4. Enter the adjustment on the Smart Worksheet, Line K 

   
   The Smart Worksheet will look like this:

    

   

[hasji]

Hi TurboTax Support,

I’m following up because this situation has become increasingly frustrating. I spoke with two different representatives on Saturday, and both told me there is no fix for entering attorney fees for an unlawful discrimination case in the online product. I was explicitly told I would need to use someone else to complete my taxes.

Given that guidance, and now seeing that the desktop version does support the correct entry through Forms Mode, I need clarity on why I was told otherwise and why the online product still lacks a compliant method for entering a deduction that is clearly allowed under IRS rules.

Please advise on next steps and whether TurboTax intends to correct this issue for online users.

Thank you,

[BillM223 · Accepted solution]

As a former programmer of income tax software (not Intuit), I can tell you that it is simply not possible for any tax software product to handle every possible tax situation, especially since the tax law changes a little or a lot every year.

TurboTax has the Desktop product in part because it does allow you to make overrides in many situations so that the bottom line number on your return will be correct.

Susan's explanation is on point in telling you how to get a return out with the correct bottom line numbers. And in the, frankly, unlikely event that the IRS sends you a letter questioning how this was entered, all you have to do is respond that you created the return as accurately as you could within the limits of the software. This is an explanation that the IRS will understand, because they, of course, have their own software with its own limits. 

P.S. we are not TurboTax Support, we are a Community of TurboTax users complimented by a group of Champs (Superusers) and employees (Susan, myself, and others) who answer tax questions for the gazillions of TurboTax users. If you spoke to people at this number, then those people are TurboTax Support in the conventional sense.

[hasji]

Hi Bill,

Thank you for the explanation. I want to be clear about the source of my frustration. When I contacted TurboTax Support directly, none of the representatives provided the information that you and Susan have shared here. Instead, I was told there was no fix and that I would need to use another service to complete my return. That guidance ended up costing me additional time and money.

If the Desktop override method is the correct workaround, TurboTax Support should have communicated that upfront. I’m not criticizing the Community contributors—you’ve been far more helpful than the official support channels—but the inconsistent guidance has a real financial impact on users.

Thank you again for taking the time to clarify the technical details.

Best,
Umesh

[hasji]

I want to thank you guys for resolving this issue, which experts at Turbo tax could not do even though I was explaining it exactly like you guys said. And was paying expert fees of $150. In the end, I gave up and did the taxes myself and followed the advice you gave and it worked fine. So many thanks.