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EMichael
Level 2

Legal Fees Above the line deductions

the program does not seem to allow the above the line deductions for legal fees as found in Page 90 of 2019 1040 instructions:

 

•Attorney fees and court costs for actions involving certain unlawful dis-crimination claims, but only to the ex-tent of gross income from such actions (see Pub. 525). Identify as “UDC.”

2 Best answer

Accepted Solutions
DianeC958
Expert Alumni

Legal Fees Above the line deductions

To enter your qualifying legal fees go to

  • Wages & Income
  • Less Common Income
  • Miscellaneous Income
  • Other Reportable Income

 

Enter the for the description "Qualifying Legal Fees" and the amount as a negative number.

 

This amount will show as a reduction on your tax return.

 

@EMichael

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

View solution in original post

macuser_22
Level 15

Legal Fees Above the line deductions

That is a calculation that is not supported by TurboTax.

 

It can be properly entered though but only by using the forms mode that is only in the CD/download desktop versions.

 

Switch to the forms mode and select the "1040/1040SR" Worksheet and scroll down to Schedule 1 "Other Adjustments to Income Smart Worksheet" line H.   Enter UDC and the amount.  That is the ONLY way to get it on line 22 of Schedule 1 as required.

 

Entering as Misc income will put it in the wrong place inviting an IRS audit.

 

See:

https://ttlc.intuit.com/community/choosing-a-product/help/are-there-any-personal-individual-tax-situ...

 

Unsupported Calculations and Situations in the
2019 TurboTax Individual Federal Tax Software Program

19. Legal Fees for Unlawful Discrimination Lawsuits: This is not supported in TurboTax.

 

Screen Shot 2020-04-12 at 8.56.23 AM.jpg

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

View solution in original post

5 Replies
EMichael
Level 2

Legal Fees Above the line deductions

Publication 525 at Page 30 states:

 

"Deduction for costs involved in unlawful discrimination suits.You may be able to de-duct attorney fees and court costs paid to re-cover a judgment or settlement for a claim of unlawful discrimination under various provisions of federal, state, and local law listed in section 62(e), a claim against the U.S. Government, or a claim under section 1862(b)(3)(A) of the So-cial Security Act. You can claim this deduction as an adjustment to income on Schedule 1 (Form 1040 or 1040-SR), line 22. The following rules apply.•The attorney fees and court costs may be paid by you or on your behalf in connection with the claim for unlawful discrimination, the claim against the U.S. Government, or the claim under section 1862(b)(3)(A) of the Social Security Act.•The deduction you're claiming can't be more than the amount of the judgment or settlement you're including in income for the tax year.•The judgment or settlement to which your attorney fees and court costs apply must occur after October 22, 2004."

 

The program does not allow such an entry to be placed on the dotted line, identified as UDC and added to the total above the line deductions

DianeC958
Expert Alumni

Legal Fees Above the line deductions

To enter your qualifying legal fees go to

  • Wages & Income
  • Less Common Income
  • Miscellaneous Income
  • Other Reportable Income

 

Enter the for the description "Qualifying Legal Fees" and the amount as a negative number.

 

This amount will show as a reduction on your tax return.

 

@EMichael

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

View solution in original post

macuser_22
Level 15

Legal Fees Above the line deductions

That is a calculation that is not supported by TurboTax.

 

It can be properly entered though but only by using the forms mode that is only in the CD/download desktop versions.

 

Switch to the forms mode and select the "1040/1040SR" Worksheet and scroll down to Schedule 1 "Other Adjustments to Income Smart Worksheet" line H.   Enter UDC and the amount.  That is the ONLY way to get it on line 22 of Schedule 1 as required.

 

Entering as Misc income will put it in the wrong place inviting an IRS audit.

 

See:

https://ttlc.intuit.com/community/choosing-a-product/help/are-there-any-personal-individual-tax-situ...

 

Unsupported Calculations and Situations in the
2019 TurboTax Individual Federal Tax Software Program

19. Legal Fees for Unlawful Discrimination Lawsuits: This is not supported in TurboTax.

 

Screen Shot 2020-04-12 at 8.56.23 AM.jpg

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

View solution in original post

EMichael
Level 2

Legal Fees Above the line deductions

Thank You!  Simple to do and worked perfectly.

EMichael
Level 2

Legal Fees Above the line deductions

Thank you.

 

That worked perfectly and made the tax form filled out per the instructions.  

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