Can I deduct legal expenses related to a Social Security disability claim for federal or state tax purposes?

[GB2010]

Are any legal expenses deductible for federal or state tax purposes?

[Opus 17]

Those legal expenses are not deductible on a federal tax return.  They may be deductible in some states that follow the pre-2018 rules for itemized deductions.  However, even then, the legal fees are deductible only as a percentage of the social security income that is taxable.  For example, all SS benefits are non-taxable in New York, so even though the legal fees are theoretically allowed as an itemized deduction, the deductible percentage is zero.  If you were to look at your state tax return and find that your SS benefit is 50% taxable, for example, then 50% of the legal fees may be listed as an itemized deduction.  Whether you actually benefit depends on your overall income and other deductions. 

[GB2010]

Thank you, Opus 17. Where would I input the amount in TurboTax to determine if any portion is deductible on my Maryland return?

[Opus 17]

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@GB2010 wrote:

Thank you, Opus 17. Where would I input the amount in TurboTax to determine if any portion is deductible on my Maryland return?

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Maryland does not tax social security benefits, so none of your legal expenses to get the benefit is deductible, so you should not list the legal expenses anywhere in Turbotax.

https://www.marylandtaxes.gov/forms/Personal_Tax_Tips/tip51.pdf

[GB2010]

Thank you. For future reference, where would I have input the legal expense?

[Opus 17]

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@GB2010 wrote:

Thank you. For future reference, where would I have input the legal expense?

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You can enter miscellaneous itemized deductions on the deductions and credits page in the federal interview.  If your state allows, they will flow to the state. 

[GB2010]

Great.

Thanks, 

George