+27 With Are Tax Attorney Fees Deductible 2020 References

Top Tips For Hiring the Best Tax Attorney in Atlanta from www.meetrv.com

Are Tax Attorney Fees Deductible in 2020?

Introduction

If you have been consulting with a tax attorney, you may be wondering whether the fees you have paid are tax deductible. The answer is not straightforward, as it depends on the specific circumstances of your situation. In this article, we will explore the rules regarding tax attorney fees and their deductibility in 2020.

What Are Tax Attorney Fees?

Tax attorney fees are the fees charged by a lawyer for providing legal advice and representation in tax-related matters. These fees can be substantial, especially if you are dealing with complex tax issues such as an audit, tax fraud, or tax evasion.

General Rule: Deductible

In general, tax attorney fees are deductible as miscellaneous itemized deductions on your federal income tax return. However, there are several limitations and restrictions that apply to this deduction.

Limitation: 2% of AGI

The first limitation is that you can only deduct the amount of your miscellaneous itemized deductions that exceed 2% of your adjusted gross income (AGI). This means that if your AGI is $100,000, you can only deduct the portion of your miscellaneous itemized deductions that exceeds $2,000.

Restriction: Subject to AMT

The second restriction is that if you are subject to the alternative minimum tax (AMT), you cannot deduct your miscellaneous itemized deductions. This is because the AMT disallows many deductions that are allowed under the regular tax system.

Exception: Certain Deductible Expenses

There is, however, an exception to the 2% limitation and the AMT restriction for certain deductible expenses. These expenses include: - Unreimbursed employee business expenses - Tax preparation fees - Investment expenses - Safe deposit box rental fees - Certain other miscellaneous expenses

When Are Tax Attorney Fees Deductible?

Now that we have covered the general rules and restrictions, let's look at some specific situations where tax attorney fees may be deductible.

1. Business Expenses

If you are a business owner and you hire a tax attorney to advise you on tax-related matters that are directly related to your business, such as tax planning, compliance, or litigation, then the fees you pay are generally deductible as ordinary and necessary business expenses.

2. Investment Expenses

If you incur tax attorney fees in connection with your investments, such as legal advice on the tax consequences of buying or selling securities, then the fees may be deductible as investment expenses.

3. Tax-Related Lawsuits

If you are involved in a tax-related lawsuit, such as an audit or a dispute with the IRS, and you hire a tax attorney to represent you, then the fees you pay are generally deductible as a miscellaneous itemized deduction.

Conclusion

In conclusion, tax attorney fees may be deductible as miscellaneous itemized deductions on your federal income tax return, subject to the 2% limitation and the AMT restriction. However, there are several exceptions and specific situations where the fees may be deductible as ordinary and necessary business expenses, investment expenses, or tax-related lawsuit expenses. If you are unsure whether your tax attorney fees are deductible, consult with a qualified tax professional for advice.

Share :