Employment Legal Expenses

[EAW1]

I was recommended for termination from my employer.  I appealed the termination and requested a hearing.  An employment separation agreement was negotiated before the hearing.  I was awarded a settlement on which I paid both federal and state taxes.  

Are the legal fees I paid my attorney deductible?

If so, where do I enter them in TurboTax?

[ColeenD3]

Unfortunately, no.

The Tax Cuts and Jobs Act of 2017  eliminates miscellaneous itemized deductions as part of individual tax reform. 

Prior to this, an individual taxpayer who took itemized deductions instead of a standard deduction could deduct legal fees that were greater than 2% of his or her adjusted gross income as a miscellaneous expense. Now, taxpayers can no longer deduct legal fees as a miscellaneous expense.

Legal Fees

[Theo79109]

Certain states allow you to deduct legal expenses on your state return, correct?

[FordFamily]

Hello,
I have a similar situation that I'm not has the same answer you provided to the question you answered...

I was laid off and asked to sign separation agreement including terms that I believed were not fair for the settlement they were offering. I retained counsel, and a settlement was reached. A portion of my settlement was (per the finalized agreement language) paid directly to my attorney from my employer for his legal fees. Both the attorney and I received a 1099 for the payment amount.

The 1099-MISC I received from my employer has the payment amount (again, which was not paid to me) classified in Box 1 "Rent". As I have tried to record this "income" using that classification, TurboTax prompts me to fill out Sched C rental info (which has nothing to do with this "income"). I don't want to make something up. 

Can I enter the amount in TurboTax in 1009-MISC Box 10 "Gross attorney's fees"? Seems that either option

Also, can input that amount elsewhere as a deductible expense? (since the funds never came to me)

Any advice is appreciated. Failing that, what is best path to someone who can assist?

- David

[RobertB4444]

You need to know what the settlement was for.  Any settlement for lost wages is taxable as income.  You can't take a deduction from that for attorney's fees but you only have to enter the amount that was replacement for wages.  If your settlement included an amount for 'attorney's fees' then that portion is not taxable.  You will need to get with your attorney and figure out what you received this settlement for.

@FordFamily