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mnoricks
New Member

Can I deduct legal fees incurred to ensure the trustee is complying with fiduciary responsibilities in the case of an irrevocable Family trust?

 
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HelenaC
New Member

Can I deduct legal fees incurred to ensure the trustee is complying with fiduciary responsibilities in the case of an irrevocable Family trust?

Generally, you can't deduct fees paid for advice or help on personal matters or for things that don't produce taxable income. For example, you can't deduct fees for:

  • filing and winning a personal injury lawsuit or wrongful death action—the reason is that the money you win isn't taxable
  • settling a will or probate matter between your family members
  • help in closing the purchase of your home or resolving title issues or disputes (these fees are added to your home’s tax basis)
  • obtaining custody of a child
  • obtaining child support
  • name changes
  • legal defense in a civil lawsuit or criminal case that's not work-related—for example, attorney fees you pay to defend a drunk driving charge or against a neighbor's claim that your dog bit and injured her child.


If your payment to the lawyer was for the pursuit of taxable income listed below:

  • Pursuing taxable income on your behalf, or is working on a determination, collection, or refund of any tax. For example, if you’re going through a divorce and pay $1,000 to a lawyer who is working to secure alimony for you, you may deduct the $1,000. However, hiring a lawyer to gain custody of a child is not deductible.
  • Collecting disputed Social Security only to the extent that your benefits are taxable on your tax return (i.e., if 50% of your social security is taxable, 50% of the legal fees would be deductible.)  That likely would result in no deduction if your payment of legal fees was for social security disability payments.
  • Incurred while doing or working to keep your job. For instance, if you’re in a legal dispute with your company over unlawful termination, you could deduct the expenses as long as you’ve paid the fees you’re deducting and you’re deducting them in the year you paid them.


To deduct certain legal fees related to taxable income: 

  • Type legal expenses, deduction in the search or find box, click search.
  • Click on Jump to legal expenses, deduction.
  • Continue with the onscreen questions.

Legal deductions are limited to 2% of your Adjusted Gross Income (AGI). Click on What is the 2% rule? for additional information

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