Can I deduct legal fees as a startup cost if my attorney billed me after my business start date?

[deanadk]

I started a small online business and had an attorney create Terms and Conditions, Privacy and a Partnership agreement. I paid him after my start date.  Can they still be entered on TT Home and Business as a startup cost? When I entered it, TT kicked it out stating the expense was after my start date.

[PatriciaV]

Since the legal services relate to creating your business, the expense may be reported as startup costs. Use the date your business started to avoid the TurboTax limitation. However, you may expense up to $5,000 in startup costs in the year that your business starts instead of amortizing the cost over several years.

Note that a partnership files a separate return (available in TurboTax Business). You would not report a partnership in TurboTax Home & Business.

[deanadk]

Thank you so much for replying!  As I stated in my question, I paid the attorney AFTER my start date which is why TT kicked the legal payment out.  How do get around that?  The attorney billed me after my business start date in 2023 and I'm still receiving bills on into 2024 due to revisions.  Since all payments were made after my start date how do I enter it into TT so it doesn't kick it out?

Thanks!!

DK

[deanadk]

I just re-read your answer.  Are you saying I should enter the payments as being paid on my start date even though I paid them after?  Is that legal to change the date a bill was paid?  Or did I read that wrong?

Thanks!

DK

[ThomasM125]

By default, you don't treat expenses paid after the start-up date as start-up expenses, assuming you are a cash basis taxpayer. You could make an argument that you should treat your legal fees as start-up expenses based on the purpose of the expenses and the fact that the services were provided before you started your business. If you choose to do this, you may have to enter a date in the previous year when the services were provided, in order for TurboTax to treat them as start-up expenses. The date you choose will not appear on your tax return, it is just used to allow the program to give the expenses the proper treatment on your tax return.

[deanadk]

Thank you so much for your help!!

DDK