Are divorce attorney fees tax deductible?

Are divorce attorney fees tax deductible?

Whether attorneys fees are tax deductible is a question for your accountant. 

Your attorney should not be your resource for personal finance questions. A professional attorney does have knowledge of the law as it pertains to the division of property, but your accountant is the proper person to consult with questions about taxes, including how to file and what deductions are allowed.

We can tell you this…

As of March 2018, there can be no deductions for attorney’s fees. The Tax Cuts and Jobs Act of 2017 did away with itemized deductions for individuals. This ruling applies to far more than divorce attorney’s fees. Under the 2017 Act, the standard deduction for individual filers was bumped from $6,500 to $12,000, so even if personal legal fees were permitted, it would be unlikely that your divorce attorney fees would exceed this amount.

Before this Act, taxpayers could deduct legal fees of any kind as long as the fees were 2% or more of the person’s adjusted gross income. Attorney’s fees were filed under ‘miscellaneous expense,’ but they were definitely allowed.

Legal fees that apply to your job are always permissible. If you own your own business or file a lawsuit against the company you work for, there’s a good chance that your legal fees would be eligible for deduction on your personal income taxes, but currently, divorce attorney fees are considered personal expenses.

Any fees associated with a divorce, such as counseling, mediation, or court fees, must be paid out of your taxable income, but they will not be eligible for deduction.

With all that said, there are other instances, such as when you will be receiving alimony or property after a divorce, in which the associated fees may be tax deductible because these things will increase your overall taxable income. Always consult a personal accountant to be sure which fees can be deducted.