Where can I deduct attorney fees related to a lawsuit involving discrimination and sex from my employer.

[GrassHopper]

I have 2 lawsuits. One was for work related discrimination where I was an employee and the other was for a company I worked as a sub-contractor (1099).

On the 1st on, we recovered back wages and damages for sex discrimination and whistle blower. I'm thinking it's not subject to the 2% rule and should be listed on the 1040.

On the 2nd one, we recovered wages that should have been paid as an employee and not as a sub-contractor. I am thinking it should be listed on the Schd. C under legal expenses.

This is for 2016 tax year.

[GrassHopper]

Thanks DoninGA but I've already been there. Thanks.

There is more then 1 place in TT to list expenses for attorneys fee. TT does not ask enough questions to determine where to list it.

If the legal expense is not subjected to the 2% rule, where does it go?

I found this answer but in 2016, the 1040 line 36 is NOT the place to list this. Line 36 is the addition of lines 23 through 35. I have looked at the IRS publication 529 and still need the correct answer.

"Yes, you can deduct legal fees. See how to enter at the bottom of the screen.

Legal fees related to doing or keeping your job, see IRS Publication 529, Miscellaneous Deductions, page 5, https://www.irs.gov/pub/irs-pdf/p529.pdf . This deduction is subject to 2% of your Adjusted Gross Income. You can claim the amount of expenses that is more than 2% of your adjusted gross income. You figure your deduction on Schedule A by subtracting 2% of your adjusted gross income from the total amount of these expenses. Your adjusted gross income is the amount on Form 1040, line 38, or Form 1040NR, line 37.

Legal Expenses for unlawful discrimination claims, see IRS Publication 529, Miscellaneous Deductions, page 10  https://www.irs.gov/pub/irs-pdf/p529.pdf . You may be able to deduct, as an adjustment to income on Form 1040, line 36, rather than as a miscellaneous itemized deduction, attorney fees and court costs for actions settled or decided after October 22, 2004, involving a claim of unlawful discrimination, a claim against the U.S. Government, or a claim made under section 1862(b)(3)(A) of the Social Security Act. However, the amount you can deduct on Form 1040, line 36, or Form 1040NR, line 35, is limited to the amount of the judgment or settlement you are including in income for the tax year. See Publication 525 for more information.

To enter legal fees in the TurboTax CD/Download version:

• Enter Legal expenses, deduction in the Find/searchbox.
• Enter the appropriate questions.

Top answer by: TurboTaxHelenaC"

[DoninGA]

For entering legal expenses for unlawful discrimination claims as an adjustment to income, you must be using the TurboTax desktop editions.  In Forms mode open Form 1040.  Scroll down to the Other Adjustments Smart Worksheet between Line 35 and Line 36.
On Line H of the Smart Worksheet enter "UDC" for attorney or court costs for actions settled or decided after October 22, 2004, involving certain unlawful discrimination claims.
UDC will be entered on Line 36 with the amount.
 See the government instructions for the amount to enter for the "UDC" adjustment

[GrassHopper]

Thanks...that's what I was looking for.

[DoninGA]

Enter legal expenses, deduction in the Search/Find box located in the upper right of the program screen.  Click on Jump to legal expenses, deduction