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Six Questions to Ask Before Hiring an IRS Tax Attorney from www.toptaxdefenders.com

Understanding Tax Attorney Fees and Deductibility

Introduction

When dealing with tax issues, many individuals and businesses turn to tax attorneys for help. However, the cost of hiring a tax attorney can be significant. One question that often arises is whether these fees are deductible on your tax return. In this article, we will explore the deductibility of tax attorney fees and provide guidance on how to determine if these fees can be claimed on your tax return.

What Are Tax Attorney Fees?

Tax attorney fees are the fees paid to a lawyer who specializes in tax law. These fees can be incurred for a variety of reasons, including tax planning, tax preparation, and representation in tax audits or disputes. Tax attorneys can provide valuable guidance and support when dealing with complex tax issues, but their services can come at a high cost.

Deductibility of Tax Attorney Fees

Whether tax attorney fees are deductible depends on the purpose of the fees. The IRS allows taxpayers to deduct legal fees that are paid 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 related to your income or investment property, the fees may be deductible.

When Are Tax Attorney Fees Not Deductible?

Tax attorney fees are not deductible if they are incurred for personal reasons. For example, if you hire a tax attorney to help you with a divorce or child custody case, the fees would not be deductible. Similarly, if you hire an attorney to defend you against criminal charges, the fees would not be deductible.

How to Claim Tax Attorney Fees on Your Tax Return

To claim tax attorney fees on your tax return, you must itemize your deductions on Schedule A of Form 1040. You can only deduct legal fees that are in excess of 2% of your adjusted gross income (AGI). This means that if your AGI is $100,000 and you paid $3,000 in tax attorney fees, you can only deduct $1,000 (the amount that exceeds 2% of your AGI).

Other Considerations

It is important to note that deducting tax attorney fees can be a complicated process. If you are unsure whether your fees are deductible, it may be best to consult with a tax professional. Additionally, if you are a business owner, the rules for deducting legal fees can be different. Consult with a tax professional to determine the rules that apply to your specific situation.

Conclusion

Tax attorney fees can be a significant expense, but they can also provide valuable assistance when dealing with complex tax issues. Whether these fees are deductible depends on the purpose of the fees. If you are unsure whether your fees are deductible, consult with a tax professional to ensure that you are taking the appropriate deductions on your tax return.

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