Review Of Are Tax Attorney Fees Deductible 90 2023

When are attorney fees tax deductible On what basis? from thelawadvisory.com

Are Tax Attorney Fees Deductible in 2023?

Introduction

As we approach the tax season in 2023, many taxpayers are wondering if they can deduct the fees paid to their tax attorney. Tax laws can be confusing, and it's always a good idea to seek the help of a tax attorney. However, the question remains: are tax attorney fees deductible in 2023? Let's find out.

What Are Tax Attorney Fees?

Tax attorney fees are the fees paid to a tax attorney for the services they provide, such as tax planning, preparation of tax returns, representation before the IRS, and advice on tax-related matters.

When Can You Deduct Tax Attorney Fees?

Tax attorney fees are deductible if they are related to the production or collection of taxable income. For example, if you hired a tax attorney to help you with an IRS audit or to negotiate a settlement with the IRS, the fees you paid to the attorney would be deductible.

When Can't You Deduct Tax Attorney Fees?

There are some situations where you cannot deduct tax attorney fees. For example, fees paid for the preparation of a personal tax return are not deductible. Additionally, fees paid for tax planning advice that is not related to the production or collection of taxable income are not deductible.

What Is the 2% Limit on Miscellaneous Deductions?

Even if your tax attorney fees are deductible, there is a limit on how much you can deduct. The IRS allows you to deduct certain expenses as miscellaneous deductions, including tax attorney fees. However, these deductions are subject to a 2% limit. This means that you can only deduct the amount of miscellaneous deductions that exceeds 2% of your adjusted gross income (AGI).

What If You're Self-Employed?

If you're self-employed, tax attorney fees are deductible as a business expense. This means that you can deduct the fees as an ordinary and necessary expense of your business. However, the same 2% limit on miscellaneous deductions applies.

What Documentation Do You Need?

If you want to deduct tax attorney fees, you need to keep detailed records of the fees paid to your attorney. You should also keep copies of any invoices or receipts that you receive from your attorney. This documentation will be necessary if you get audited by the IRS.

Conclusion

In conclusion, tax attorney fees are deductible in 2023 if they are related to the production or collection of taxable income. However, these deductions are subject to the 2% limit on miscellaneous deductions. If you're self-employed, tax attorney fees are deductible as a business expense. Make sure to keep detailed records and documentation of any fees paid to your tax attorney.

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