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johndmcgovern6160
Level 1

LEGAL EXPENSES PAID AS PART OF A EMPLOYMENT SETTLEMENT

I recently revisited my 2018 Federal Tax filing. I came back to it as a result of reviewing why my legal fees incurred as part of a  successful settlement are not deemed to be tax deductible even though a 1/3 settlement check was cut directly to my attorney and was taken off my net settlement check.

 

I would assume that my attorney reported it as Business Income and subsequently paid income taxes on it. 

 

Isn't that double taxation?  

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Accepted Solutions
RobertG
Expert Alumni

LEGAL EXPENSES PAID AS PART OF A EMPLOYMENT SETTLEMENT

Legal fees used to be deductible as a miscellaneous itemized deduction.

 

Most of the miscellaneous itemized deductions were eliminated starting with 2018 returns. 

 

So it is currently treated as a personal and nondeductible expense. 

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1 Reply
RobertG
Expert Alumni

LEGAL EXPENSES PAID AS PART OF A EMPLOYMENT SETTLEMENT

Legal fees used to be deductible as a miscellaneous itemized deduction.

 

Most of the miscellaneous itemized deductions were eliminated starting with 2018 returns. 

 

So it is currently treated as a personal and nondeductible expense. 

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

View solution in original post

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