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

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Introduction

One of the most important aspects of managing your taxes is being aware of the tax deductions you can claim. One of the most commonly asked questions is whether tax attorney fees are deductible every year. In this article, we will explore this issue and provide you with some clarity on the matter.

What are Tax Attorney Fees?

Tax attorney fees are the fees that you pay to a tax attorney for their services. These services may include providing legal advice, representing you in a tax audit, or preparing and filing your tax returns.

Are Tax Attorney Fees Deductible?

The answer to this question is both yes and no. The deductibility of tax attorney fees depends on the nature of the legal services provided by the attorney.

Deductible Tax Attorney Fees

Tax attorney fees are deductible if they are related to the production or collection of income. For example, if you hire a tax attorney to help you negotiate a settlement with the IRS, the fees you pay to the attorney are deductible.

Non-Deductible Tax Attorney Fees

Tax attorney fees are not deductible if they are related to personal tax issues. For example, if you hire a tax attorney to help you with a divorce settlement, the fees you pay to the attorney are not deductible.

Are Tax Attorney Fees Deductible Every Year?

Tax attorney fees are deductible only in the year in which they are paid. If you pay tax attorney fees in 2023, you can deduct them on your 2023 tax return.

How to Claim Tax Attorney Fees Deduction

To claim tax attorney fees deduction, you must itemize your deductions on Schedule A of Form 1040. You can deduct tax attorney fees along with other miscellaneous deductions subject to the 2% floor.

Limitations on Tax Attorney Fees Deduction

There are some limitations on tax attorney fees deduction. You can deduct only those fees that are reasonable and necessary. You cannot deduct fees that are excessive or unnecessary.

Conclusion

In conclusion, tax attorney fees are deductible if they are related to the production or collection of income. However, they are not deductible if they are related to personal tax issues. Tax attorney fees are deductible only in the year in which they are paid. To claim tax attorney fees deduction, you must itemize your deductions on Schedule A of Form 1040.

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