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Legal Fees and Your Taxes

Are attorney’s fees tax deductible?

You will likely need legal advice at some point in your life.  Whether it is going through a divorce, being injured in a car accident, or needing advice about your business, attorneys offer vital assistance when you need it most.  Legal fees, however, can quickly add up.  It may help to know that some legal fees can be deducted on your taxes.  Our San Diego tax planning attorneys at Brunoro Law offer the following look at which attorney’s fees are tax deductible.

Personal v. Investment Expenses

The general rule is that legal fees that are purely personal are non-deductible, but legal fees you pay in order to obtain taxable income will be deductible.  Further, fees paid to help file for and collect a tax refund are also deductible.  For example, legal fees that will likely be deductible include:

  • Attorney’s fees for estate tax planning;
  • Business legal fees, including fees defending against claims or starting your business;
  • Tax advice, including purely personal tax advice;
  • Attorney’s fees you incur bringing a discrimination claim;
  • Tax advice during a divorce;
  • Attorney’s fees spent attempting to collect past-due alimony;
  • Legal fees incurred to evict a tenant for your rental property.

These are just a few instances in which your legal fees should be tax deductible.  Tax planning is a complex area of law and many individuals, as well as businesses, miss out potential tax deductions.  When you seek legal advice next, ask your attorney whether you should be able to deduct his or her attorney’s fees.  Additionally, ask your attorney to prepare a billing statement that clearly shows what part of the fees are deductible.  For instance, a divorce bill should separately reflect how much was charged for consideration of tax matters.

For individualized assistance with your business or personal taxes, contact our California tax planning attorneys at Brunoro Law.  Our tax attorneys assist businesses and individuals with business and tax related matters.  We have considerable experience with international tax planning, as well as tax collections and tax controversies.

Posted in: Tax Planning

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