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Deductibility of Legal Attorney fees involving a suit for Unlawful Termination of job due to injury.

A friend was terminated from his position due to injury. He filed a suit for unlawful termination and received a settlement which his former company divided into three parts: 

1). W2 submitted for "wage-based" compensatory damages

2). 1099 for "compensatory and/or other non-wage based damages"

3. 1099 submitted to client and attorney for "other non-wage based damages, expenses and attorney fees".

The attorney fees were $16,800; 40% of the total settlement. Is there ANY portion of the expenses paid to the attorney that are deductible on the client's tax return? And due to the changes in the laws in recent years, can they be deducted without itemizing...and where would the fees be reported in Turbo Tax?

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2 Replies

Deductibility of Legal Attorney fees involving a suit for Unlawful Termination of job due to injury.

section 62(e)(18) seems to cover this. any claim about employment is actually defined as an unlawful discrimination claim.

schedule 1

Line 24h
Enter attorney fees and court costs for actions involving certain unlawful discrimination claims, but only to the extent of gross income from such actions (see Pub. 525).

Deductibility of Legal Attorney fees involving a suit for Unlawful Termination of job due to injury.

@ChipperOneHalf - I am just curious, what was the W-2 and 1099 listed as? $42,000 or another number? 

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