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legex3305
New Member

I'm imputing legal fees under other deductions and credits for settlements my wife and I won against our former employer. It isn't calculating against our deductions.

 
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7 Replies

I'm imputing legal fees under other deductions and credits for settlements my wife and I won against our former employer. It isn't calculating against our deductions.

Most legal fees are no longer a federal deduction, it was eliminated in the tax reform act.  The program allows you to enter them because some states might allow the deduction.

Legal fees specifically for a claim of unlawful discrimination, or whistleblower lawsuits against the federal government, are still deductible but the procedure is not officially supported by Turbotax.  You can claim the deduction by making a manual entry on one forms using Forms mode, which is only available in the desktop program installed on your own computer -- online does not have Forms mode.  Or see a professional this year.

MinhT
Expert Alumni

I'm imputing legal fees under other deductions and credits for settlements my wife and I won against our former employer. It isn't calculating against our deductions.

Up to tax year 2017, legal fees incurred for the protection of your income were deductible as a miscellaneous itemized deduction subject to the 2% of AGI floor.

Under the Tax Cuts and Jobs Act, the miscellaneous itemized deductions subject to the 2% of AGI floor are suspended for expenses incurred after December 31, 2017 through 2025.

Therefore, your legal fees are no longer deductible for tax year 2018.

 


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I'm imputing legal fees under other deductions and credits for settlements my wife and I won against our former employer. It isn't calculating against our deductions.

Except for unlawful discrimination.
legex
New Member

I'm imputing legal fees under other deductions and credits for settlements my wife and I won against our former employer. It isn't calculating against our deductions.

If you have legal fees that relate to your employment or business, those fees are deductible. You can also deduct legal expenses for things that produce taxable income, such as rental property and other investments, and legal fees in connection with an income tax dispute. (TurboTax)

I'm imputing legal fees under other deductions and credits for settlements my wife and I won against our former employer. It isn't calculating against our deductions.

No.  Your information is out of date.  You can deduct legal fees related to self-employment on schedule C.  But legal fees related to a W-2 job are a miscellaneous itemized deduction subject to the 2% rule, and this entire class of deduction was eliminated by the Tax Cut and Jobs Act signed in December 2017, and covering tax years 2018-2025.  
legex
New Member

I'm imputing legal fees under other deductions and credits for settlements my wife and I won against our former employer. It isn't calculating against our deductions.

But for a lawsuit to keep my job?

I'm imputing legal fees under other deductions and credits for settlements my wife and I won against our former employer. It isn't calculating against our deductions.

Was it a claim for unlawful discrimination?  Or some other reason?
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