Although I realize that normal legal fees (contingency fees) required to obtain Long-term disability benefits can no longer be used as an Miscellaneous deduction subject to the 2% limit for federal taxes; however, my attorney informed me that the legal fees as a result of litigation are still allowed as an above-the-line deduction when the client prevailed in litigation in getting their employee benefits inclusive of long-term disability benefits under the catch all provision under § 62(e)) Section 510 (e) of the Employee Retirement Income Security Act of 1974 or American Jobs Creation Act of 2004 (AJCA)-§ 62(a)(19)[20]1 .
62e listed items, including the catchall
- Any provision of Federal, State, or local law, or common law claims permitted under Federal, State, or local law—[ERISA is a Federal Law] (i) providing for the enforcement of civil rights, or (ii) regulating any aspect of the employment relationship, including claims for wages, compensation, or benefits, or prohibiting the discharge of an employee, the discrimination against an employee, or any other form of retaliation or reprisal against an employee for asserting rights or taking other actions permitted by law."
Therefore although attorney contingency fees pertaining to LTD benefits outside of litigation are n longer deductible, legal fees and court costs as the result of litigation are still deductable
