You can deduct certain expenses as miscellaneous itemized deductions on Schedule A
(Form 1040). You can claim the amount of expenses that is more than 2% of your adjusted gross income.
Deductions subject to the 2% limit are discussed in the three categories in which you report them on Schedule A (Form 1040).
Unreimbursed employee expenses (line 21).
Tax preparation fees (line 22).
Other expenses (line 23).
Examples of unreimbursed employee expenses are listed next. The list is followed by discussions of additional unreimbursed employee expenses.
Business bad debt of an employee.
Education that is work related. (See chapter 27.)
Legal fees related to your job.
You can deduct the items listed below as miscellaneous itemized deductions. They are not subject to the 2% limit. Report these items on Schedule A (Form 1040), line 28.
Each of the following items is discussed in detail after the list (except where indicated).
Amortizable premium on taxable bonds.
Casualty and theft losses from income- producing property.
Federal estate tax on income in respect of a decedent.
Gambling losses up to the amount of gambling winnings.
Impairment-related work expenses of persons with disabilities.
Loss from other activities from Schedule K-1 (Form 1065-B), box 2.
Losses from Ponzi-type investment schemes. See Losses from Ponzi-type investment schemes under Theft in chapter 25.
Repayments of more than $3,000 under a claim of right.
Unrecovered investment in an annuity.
You cannot deduct personal legal expenses such as those for the following.
Custody of children.
Breach of promise to marry suit.
Civil or criminal charges resulting from a personal relationship.
Damages for personal injury, except for certain unlawful discrimination and whistleblower claims.
Preparation of a title (or defense or perfection of a title).
Preparation of a will.
Property claims or property settlement in a divorce.
You cannot deduct these expenses even if a result of the legal proceeding is the loss of income-producing property.
You may not be able to deduct the attorney's fees at all:
Regardless of why you need an attorney, you're going to have to pay for the lawyer's legal services. Can you take a tax deduction for those attorney's fees? Usually not, but there are some exceptions.General Rules
The general rule is simple enough: You can deduct attorney's fees you pay for:
- Trying to produce or collect taxable income, or
- To help in determining, collecting or getting a refund of any tax
In simple terms, you can take a deduction if you need an attorney's help to make money you have to pay taxes on, or if an attorney helped you with a tax matter, like representing you in an IRS audit. If the legal fees are somehow connected to taxes or taxable income, you can take a deduction.
Note: If you do a word search on "fair" at the above link (or any other IRS Pub), you'll get very few hits ...
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