Where do I deduct legal fees related to a harassment settlement that produced a 1099-MISC? Entering them in "Legal Fees" has no impact.

[john-kosmidis]

The settlement was 40k, with about 30k of associated legal fees.

[xmasbaby0]

LEGAL FEES

https://turbotax.intuit.com/tax-tips/tax-deductions-and-credits/can-i-deduct-legal-fees-on-my-taxes/...

[john-kosmidis]

Thanks. I saw that but it says to include it on the 1040, but doesn't indicate where in the software it can be entered.  

[DMarkM1 · Accepted solution]

Some legal fees such as those related to certain employment cases, such as a claim of unlawful discrimination, a claim against the US government, or a claim made under the Social Security Act, are deducted as an adjustment to income.  

In TurboTax that will be a negative entry in the "Other Reportable Income" topic.  This will show in line 8z which flows to line 10 on Schedule 1 and line 8 on the form 1040.  

Here are the steps in online versions:

1. Wages and Income left-hand menu
2. Scroll to "Less Common Income"
3. "Show More"
4. "Start/Revisit" Miscellaneous Income
5. "Start/Revisit" Other Reportable Income
6. "Yes"
7. Description "Whistleblower Legal Fees"
8. Enter the amount as a negative number "-1000"

To see the entries on the forms in online versions:

1. "Tax Tools" in the left hand menu
2. "Tools"
3. "View Tax Summary" in the main screen
4. "Preview my 1040" in the left hand menu