I started a SE job but was sued before filing paperwork. I settled the suit and decided I couldn't/didn't want to do that job. Can I write off the the settlement?

shvoydat · ‎June 4, 2019

MichaelDC · ‎June 4, 2019

Yes. You can deduct legal expenses that are:

Related to either doing or keeping your job (business), such as those you paid to defend yourself against criminal charges arising out of your trade or business,
For tax advice related to a divorce if the bill specifies how much is for tax advice and it is determined in a reasonable way, or
To collect taxable alimony

If they are related to your business and deductible, then enter on Schedule C.

Please feel free to post any additional details or questions in the comment section.

Opus 17 · ‎June 4, 2019

Are you reporting income from that job? What were you sued for?

MichaelDC · ‎June 4, 2019

Yes. You can deduct legal expenses that are:

Related to either doing or keeping your job (business), such as those you paid to defend yourself against criminal charges arising out of your trade or business,
For tax advice related to a divorce if the bill specifies how much is for tax advice and it is determined in a reasonable way, or
To collect taxable alimony

If they are related to your business and deductible, then enter on Schedule C.

Please feel free to post any additional details or questions in the comment section.

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