Famous Are Tax Attorney Fees Deductible Vs Deductible References

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

Are Tax Attorney Fees Deductible vs. Deductible?

Introduction

Tax season is upon us, and one of the most common questions that people ask is whether tax attorney fees are deductible or not. The answer is not straightforward, as it depends on the circumstances. In this article, we will explore the different scenarios where tax attorney fees are deductible or not, and what you need to know to make the most of your deductions.

When Are Tax Attorney Fees Deductible?

The good news is that tax attorney fees are deductible under certain circumstances. If you hire a tax attorney to help you with tax-related issues that are directly related to your business or employment, you can deduct those fees as business expenses. This includes fees paid for tax planning, tax advice, and representation in tax-related disputes. Another situation where tax attorney fees are deductible is when you have a tax-related lawsuit or settlement. In this case, the fees you pay to your attorney are considered part of the settlement or judgment, and you can deduct them as legal fees.

When Are Tax Attorney Fees Not Deductible?

On the other hand, there are situations where tax attorney fees are not deductible. If you hire a tax attorney for personal tax issues, such as preparing your individual tax return, those fees are not deductible. The IRS considers personal tax preparation fees as a miscellaneous itemized deduction, which is subject to a 2% floor of your adjusted gross income. Similarly, if you hire a tax attorney for estate planning purposes, those fees are not deductible. Estate planning is considered a personal matter, and the fees you pay for it are not deductible as a business expense.

How to Deduct Tax Attorney Fees

If you have tax attorney fees that are deductible, you can claim them as a business expense on your tax return. You need to itemize your deductions on Schedule A of Form 1040, and report the fees on line 17 as "Legal and Professional Services." Keep in mind that you need to keep detailed records of the fees you paid, the services you received, and the dates when you paid them. You also need to have a written agreement with your tax attorney that outlines the scope of their services and the fees you agreed to pay.

Conclusion

In conclusion, tax attorney fees can be deductible or not deductible depending on the circumstances. If you hire a tax attorney for business-related tax issues, such as tax planning, advice, and representation, you can deduct those fees as a business expense. On the other hand, if you hire a tax attorney for personal tax issues, such as preparing your individual tax return, those fees are not deductible. Regardless of the situation, make sure to keep detailed records and have a written agreement with your tax attorney to ensure that you can claim your deductions correctly.

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