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New Member
posted Apr 10, 2022 11:14:23 PM

I received a lump sum payment of SSDI in 2020. There were legal fees deducted. Where can I deduct the fees? The only place is non-deductible legal fees for Federal.

I should be able to deduct whatever percent of the fees that the taxable portion of the SSDI amount is.  I've spent a lot of time looking for a place to enter it, but can't find anything.

0 4 2329
4 Replies
Expert Alumni
Apr 11, 2022 5:36:45 AM

For federal income tax purposes, legal fees are no longer deductible. The Tax Cut and Jobs Act of 2018, disallowed miscellaneous itemized deductions for the period 2018-2025.  That includes personal legal fees, including legal fees incurred in the production of taxable income. i.e. Social Security.

 

However, you may include them and TurboTax will transfer the amount as a deduction on your state income tax return, if your state allows it. 

 

To enter:

  1. Type legal expenses, deduction in the search or find box, click search.
  2. Click on Jump to legal expenses, deduction.
  3. Continue with the onscreen interview until complete.

In general, only legal fees that are related to your business, including rental properties, can be deductions. This is true even if you didn't win the legal case in which the legal fees were incurred.

New Member
Apr 11, 2022 7:44:27 AM

Sorry, the lump sum was received in 2021.

New Member
Apr 11, 2022 7:56:30 AM

The information below, was taken directly from the Turbo Tax search questions.  It seems to be one of the few legal fee deductions you can still take.  I can find no place to enter this, where it counts as a deduction.  If entered under "Legal Fees", it won't be counted as a Federal deduction.  It just gives a message that legal fees aren't deductible under Federal taxes, but will be used for State tax purposes.

 

▾ Collecting Social Security

You can deduct the percentage of legal fees related to your Social Security benefits that are taxable.

 
Example: Eli hired an attorney to help them claim Social Security benefits, 50% of which are taxable. As a result, Eli can claim 50% of the legal fees they paid the attorney.

Expert Alumni
Apr 11, 2022 7:59:20 AM

@HelenC12  gave you perfect guidance.  That information applies to both 2020 and 2021.

As stated, The Tax Cut and Jobs Act of 2018, disallowed miscellaneous itemized deductions for the period 2018-2025.