Legal Cases that Allow You to Claim Lawyer Fees on Your Tax Returns



Hiring a lawyer can be expensive. If you retain legal counsel to help you maintain or secure income, however, you may be allowed to deduct your legal expenses on your taxes. You may be able to pursue legal action and recoup some or all of your money by knowing under what circumstances the IRS will allow you to claim attorney fees on your tax return.


Business Legal Fees

You may be able to claim legal fees that are associated with running your business. The IRS allows business entities like:

  • Corporations
  • LLCs
  • Partnerships
  • Proprietorships recoup lawyer expenses on their taxes if counsel is needed to secure or keep a business's income or to gain other money on which taxes will be paid. Legal expenses associated with helping a business grow its brand or improve its reputation also can be claimed on taxes because the money could be viewed as an investment in the business itself.

Divorce-Related Legal Expenses

The IRS does not allow you to deduct the costs of hiring a lawyer for handling most personal legal matters. However, it does allow you to claim these costs if they pertain to money on which you must pay taxes.

Couples who get divorced often must settle issues regarding child support, alimony, and other financial arrangements. If you are getting divorced and need legal help securing such support, you may be allowed to recoup your legal expense on your taxes.

In particular, you can claim your divorce-related legal fees on your taxes if you hire a lawyer to:

  • Get an ex-spouse to pay child support or alimony
  • Advise you on matters like deducting mortgage interest or child care costs on your taxes
  • Assist with other divorce matters that influence your post-divorce income or finances
If you want to claim your fees on your taxes, you should ask your lawyer to differentiate between taxable services and non-taxable services on his or her bill.

Other Applicable Cases for Deducting Lawyer Fees

The IRS allows you to claim your lawyer fees on your taxes under other legal circumstances as well. These special cases include:

  • Estate planning
  • Class action lawsuits against an employer or former employer
  • Discrimination lawsuits
  • Social Security appeals
  • Civil matters regarding doing or keeping a job or income that will be taxed
You should note, however, that you cannot deduct lawyer costs for cases that involve:

  • Child custody
  • Child support
  • Settling a will
  • Probate petitions and disputes
  • Personal injury suits
  • Wrongful death

Legal expenses for personal injury or wrongful death cases are exempt from being claimed on your taxes because the money you receive from any favorable judgment will not be taxable by the IRS.


Determining Whether or Not to Claim Lawyer Costs

Even with this information, you may find it difficult to determine whether or not you can or should claim the costs of hiring a lawyer on your taxes. You can confidently make this decision by hiring a tax professional to advise you. A tax pro can help you claim these expenses and also guide in you providing the necessary documentation for these costs to the IRS if necessary.

Lawyers often charge premium prices for their time, advice, and professional services. When you must hire a lawyer to gain, keep, or increase your income, you may be able to reclaim some of your expenses by deducting these costs on your taxes. You can claim your costs of hiring a lawyer on your tax return by knowing under what circumstances it is allowed by the IRS.

Tax Credits Guide