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Level 1

Can I deduct legal fees from a lawsuit settlement for which I received a 1099?

I was sued for an easement.  I lost the case, but was awarded a monetary settlement.  I received a 2018 1099-MISC from my attorney.  How can I deduct his fees, some of which were paid in 2017?

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Level 1

Can I deduct legal fees from a lawsuit settlement for which I received a 1099?

Unfortunately, you will not be able to deduct your attorney fees.  

In late December of 2017, Congress passed the largest tax reform bill in over 30 years. Almost every individual taxpayer will be affected by these changes, as will many businesses. 

Prior to the 2017 Act, an individual taxpayer who took itemized deductions instead of a standard deduction could deduct legal fees that were greater than 2% of his or her adjusted gross income as a miscellaneous expense. After the 2017 Act, clients can no longer deduct legal fees as a miscellaneous expense even if they choose to itemize their deductions.

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2 Replies
Level 1

Can I deduct legal fees from a lawsuit settlement for which I received a 1099?

Unfortunately, you will not be able to deduct your attorney fees.  

In late December of 2017, Congress passed the largest tax reform bill in over 30 years. Almost every individual taxpayer will be affected by these changes, as will many businesses. 

Prior to the 2017 Act, an individual taxpayer who took itemized deductions instead of a standard deduction could deduct legal fees that were greater than 2% of his or her adjusted gross income as a miscellaneous expense. After the 2017 Act, clients can no longer deduct legal fees as a miscellaneous expense even if they choose to itemize their deductions.

View solution in original post

Level 15

Can I deduct legal fees from a lawsuit settlement for which I received a 1099?

Fees for a personal legal issue are not deductible.