+27 Are Tax Attorney Fees Deductible 5000 2023

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

Are Tax Attorney Fees Deductible in 2023?

Introduction

If you've recently hired a tax attorney to help you with your taxes, you may be wondering whether you can deduct their fees on your tax return. The short answer is: it depends. While some tax attorney fees are deductible, others are not. In this article, we'll explore the ins and outs of deducting tax attorney fees in 2023.

What are Tax Attorney Fees?

First, let's define what we mean by tax attorney fees. Tax attorney fees are the fees you pay to a lawyer who specializes in tax law. These lawyers can help you with a variety of tax-related issues, including preparing and filing your tax return, representing you in an audit or tax court, and helping you resolve disputes with the IRS.

Deductible Tax Attorney Fees

Now, let's talk about which tax attorney fees are deductible. Generally, you can deduct tax attorney fees that are related to producing or collecting taxable income. For example, if you hire a tax attorney to help you with a tax issue related to your business, you can deduct their fees as a business expense. Similarly, if you hire a tax attorney to help you with a tax issue related to rental property, you can deduct their fees as a rental expense.

Non-Deductible Tax Attorney Fees

On the other hand, there are some tax attorney fees that are not deductible. For example, if you hire a tax attorney to help you with a personal tax issue, such as filing your individual tax return or resolving a dispute with the IRS related to your personal taxes, you cannot deduct their fees. Similarly, if you hire a tax attorney to help you with a non-tax related issue, such as drafting a will or representing you in a divorce case, you cannot deduct their fees.

The 2% Rule

Even if your tax attorney fees are deductible, there's one more hurdle you'll need to clear. In order to deduct tax attorney fees, they must exceed 2% of your adjusted gross income (AGI). For example, if your AGI is $100,000, you can only deduct tax attorney fees that exceed $2,000.

Other Tax-Related Expenses to Consider

Tax attorney fees are just one of many tax-related expenses you may be able to deduct on your tax return. Other common tax-related expenses include tax preparation fees, investment expenses, and business-related travel expenses. Be sure to keep careful records of all your tax-related expenses so you can claim all the deductions you're entitled to.

Conclusion

In conclusion, tax attorney fees can be deductible in certain circumstances, but not in others. If you hire a tax attorney to help you with a tax issue related to producing or collecting taxable income, you may be able to deduct their fees. However, if you hire a tax attorney to help you with a personal tax issue or a non-tax related issue, you cannot deduct their fees. Additionally, your tax attorney fees must exceed 2% of your AGI in order to be deductible. As always, be sure to consult with a tax professional to ensure you're taking all the deductions you're entitled to.

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