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Can I deduct legal fees paid to secure a lump sum Social Security payout? Its considered taxable income.

I spent $6000 in Legal Fees to Secure Social Security Disability. I received a Lump sum an SSA-1099. Since I am being taxed on the Lump Sum as income, Can I deduct the Legal fees since the law reads as follows?  Legal fees are generally not deductible. The two exceptions are for legal fees incurred to determine or collect any tax liability, and legal fees expended to secure taxable income.

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Level 1

Can I deduct legal fees paid to secure a lump sum Social Security payout? Its considered taxable income.

How much you can deduct for your attorneys fees depends on how much of your lump sum SSDI benefits end up being taxable once you enter everything into your tax return. Use the same percentage for the attorney's fees. You will first have to enter your SSA-1099 along with all other income.  Next, preview your return to determine how much, if any, of the SSDI, was taxable.  This appears on line 20b of Form 1040, or 14b of Form 1040A.  

If any amount appears on the line B for Social Security, a portion of your SSDI benefits were taxable.  This means that a portion of your attorney's fees are likewise deductible, in the same percentage.  So if you found that $5,000 out of $10,000 in benefits turned out to be taxable, then ½ of the attorneys fee could also be entered into Schedule A as part of your itemized deductions. 

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Level 1

Can I deduct legal fees paid to secure a lump sum Social Security payout? Its considered taxable income.

How much you can deduct for your attorneys fees depends on how much of your lump sum SSDI benefits end up being taxable once you enter everything into your tax return. Use the same percentage for the attorney's fees. You will first have to enter your SSA-1099 along with all other income.  Next, preview your return to determine how much, if any, of the SSDI, was taxable.  This appears on line 20b of Form 1040, or 14b of Form 1040A.  

If any amount appears on the line B for Social Security, a portion of your SSDI benefits were taxable.  This means that a portion of your attorney's fees are likewise deductible, in the same percentage.  So if you found that $5,000 out of $10,000 in benefits turned out to be taxable, then ½ of the attorneys fee could also be entered into Schedule A as part of your itemized deductions.