How do I enter legal fees for unlawful discrimination claims on the 2018 forms. I understand those fees are still allowed as above-the-line deductions?

[KittyM · Accepted solution]

Yes, you still can deduct legal fees for unlawful discrimination claims in 2018.  However, remember that your deduction for legal fees in employment and qualifying whistleblower cases cannot exceed the income you receive from the lawsuit in the same tax year.

To enter your qualifying legal fees, 

• In your open Federal return, choose the tab for Wages & Income
• Scroll down to Less Common Income and Show more
• Start/Revisit Miscellaneous Income and choose Other reportable income 
• Say Yes to continue to the screen "Other Taxable Income". Enter the description "Qualifying Legal Fees" and the amount as a negative number. 

A corresponding subtraction will be entered on Line 21 of your return.

[LaJolla]

Although I realize that normal legal fees (contingency fees) required to obtain Long-term disability benefits can no longer be used as an Miscellaneous deduction subject to the 2% limit for federal taxes; however, my attorney informed me that the legal fees as a result of litigation are still allowed as an above-the-line deduction when the client prevailed in litigation in getting their employee benefits inclusive of long-term disability benefits under the catch all provision under § 62(e))  Section 510 (e) of the Employee Retirement Income Security Act of 1974 or American Jobs Creation Act of 2004 (AJCA)-§ 62(a)(19)[20]1 .

62e listed items, including the catchall

•  Any provision of Federal, State, or local law, or common law claims permitted under Federal, State, or local law—[ERISA is a Federal Law] (i) providing for the enforcement of civil rights, or (ii) regulating any aspect of the employment relationship, including claims for wages, compensation, or benefits,    or prohibiting the discharge of an employee, the discrimination against an employee, or any other form of retaliation or reprisal against an employee for asserting rights or taking other actions permitted by law."

Therefore although attorney contingency fees pertaining to LTD benefits outside of litigation are n longer deductible, legal fees and court costs as the result of litigation are still deductable

[Lisa995]

https://rroyselaw.com/tax-law/article/no-deduction-for-attorneys-fees-under-the-tax-cuts-and-jobs-ac...