Review Of Near Are Tax Attorney Fees Deductible In 2020 References

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

Near Are Tax Attorney Fees Deductible in 2020?

Introduction

Tax attorney fees can be a significant expense for many taxpayers, especially those who are dealing with complex tax issues. However, the question arises as to whether these fees are deductible on your tax return. In this article, we will explore the rules surrounding tax attorney fees and what you need to know before you claim them as a deduction.

When are Tax Attorney Fees Deductible?

Tax attorney fees are deductible if they are incurred for the production or collection of income, or for the management, conservation, or maintenance of property held for the production of income. This means that if you hire a tax attorney to help you with a tax issue that is related to your business or investment property, the fees you pay are generally deductible on your tax return.

When are Tax Attorney Fees Not Deductible?

Tax attorney fees are not deductible if they are incurred for personal reasons, such as a divorce or a criminal defense. If you hire a tax attorney to help you with a personal legal matter, you cannot deduct the fees on your tax return.

How to Claim Tax Attorney Fees as a Deduction

To claim tax attorney fees as a deduction, you must itemize your deductions on Schedule A of your tax return. The fees are reported on line 23 of Schedule A, which is labeled "Job Expenses and Certain Miscellaneous Deductions." However, you can only deduct the amount of fees that exceeds 2% of your adjusted gross income (AGI).

Example

Let's say your AGI is $50,000 and you paid $3,000 in tax attorney fees. You can only deduct the portion of the fees that exceeds 2% of your AGI, which is $1,000 (2% of $50,000). Therefore, you can deduct $2,000 ($3,000 - $1,000) on your tax return.

Alternative Deduction

If you do not want to go through the hassle of itemizing your deductions, you can take the standard deduction instead. For the tax year 2020, the standard deduction is $12,400 for single filers and $24,800 for married filing jointly. However, if you take the standard deduction, you cannot deduct tax attorney fees or any other miscellaneous expenses.

Conclusion

Tax attorney fees can be a valuable deduction if they are incurred for business or investment purposes. However, you must make sure that you meet the requirements for deductibility and that you keep accurate records of your expenses. If you have any questions about tax attorney fees or any other tax-related matter, it is always best to consult with a qualified tax professional.

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