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akw906
New Member

1099 Legal Fees

I am trying to find out how to put my Legal fees Above the Line. I am unsure how to do so. I have 2 1099 one is pay out and the other is my lawyers I received 25000 total, 7500 was lost wage came as a W-2.Another was Pain and Suffering 7500 as a 1099 and the other  was my lawyers pay out at $10,000. Do i pay taxes on the what I paid him?

1 Reply
PatriciaV
Employee Tax Expert

1099 Legal Fees

Only legal fees associated with Unlawful Discrimination Claims are deductible above the line, on the first page of your 1040, as an adjustment to gross income. However, a few limitations apply. You must be the party who was discriminated against and your lawsuit must have resolved after October 22, 2004. You can't deduct more than the amount you recover in the lawsuit. This deduction goes on Line 36 of your 1040, and it includes court costs as well as attorney fees.

To appear "above the line," legal fees must be entered directly on the "Other Adjustments to Income Smart Worksheet" Line H. 

To do this, you must use a TurboTax CD/Download Product (any version). This entry cannot be made in TurboTax Online. See this post for more help: How do I switch from TurboTax Online to the TurboTax software?

Open your return in TurboTax for desktop. Click the "Forms" icon in the header (or go to Forms in the menu bar).

Once in Forms Mode, click on Form 1040 in the left column. Scroll down to Line 36. Immediately above, on the Smart Worksheet, enter "UDC" on Line H and the amount of your attorney fees (see screenshot below - click to enlarge). This entry is "above the line" for your Adjusted Gross Income.

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