Where specifically do I enter employment related legal fees on Turbo Tax? It says to enter them under miscellaneous expenses on Schedule A, but I am unable to find that in Turbo Tax. Thank you.
Unfortunately, you don't.
Employment related legal expenses, and all miscellaneous deductions, were eliminated by the changes to the tax laws.
There is a small exception for legal fees such as those you paid to defend yourself against criminal charges arising out of your trade or business.
If you qualify for the exception, here is how to enter in TurboTax Premier for Windows:
Deductions & Credits
Other Deductions & Credits
Scroll to legal fees
For more information, follow this link: Misc Deductions 2018
Yes, you still can deduct legal fees for unlawful discrimination claims in 2018. However, remember that your deduction for legal fees in employment and qualifying whistleblower cases cannot exceed the income you receive from the lawsuit in the same tax year.
To enter your qualifying legal fees,
In your open Federal return, choose the tab for Wages & Income
Scroll down to Less Common Income and Show more
Start/Revisit Miscellaneous Income and choose Other reportable income
Say Yes to continue to the screen "Other Taxable Income". Enter the description "Qualifying Legal Fees" and the amount as a negative number.
A corresponding subtraction will be entered on Line 21 of your return.
I do not think this works. IRS publication 529 indicates that the deduction should be entered on schedule A. However, as we have learned Turbo Tax will not permit you to enter this data on line 16 in Schedule A. The line is locked. There is a zoom sheet reference, but again that does not allow for the deduction. Turbo Tax is making the decision for us.
Pub 529 states:
You may be able to deduct, as an adjustment to income on your Schedule 1 (Form 1040 or 1040-SR), or Form 1040-NR, attorney fees and court costs for actions settled or decided after October 22, 2004, involving a claim of unlawful discrimination, a claim against the U.S. Government, or a claim made under section 1862(b)(3)(A) of the Social Security Act. However, the amount you can deduct on your Schedule 1 (Form 1040 or 1040-SR), or Form 1040-NR, is limited to the amount of the judgment or settlement you are including in income for the tax year. See Pub. 525 for more information.
These deductions are no longer reported on Schedule A. Rather, they are an adjustment to income on Schedule 1, line 8.
To enter the adjustment:
- Under the Federal menu, choose Wages & Income
- Expand the menu for Less Common Income
- Click Start/Revisit next to Miscellaneous Income, 1099-A, 1099-C
- Click Start/Revisit next to Other reportable income
- Any Yes
- On the following screen, give a description and enter the dollar amount as a negative number
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Thanks. Is this an IRS position or just a work around?
I have seen this suggestion. But if I declare negative income I would be both taking standard deduction (my itemized deductions are only $21k) and deducting the legal expenses. Seems like double dipping.