I was recently awarded a settlement, from which my attorney was also paid. Can I deduct these attorney's fees from my taxes?
2006-07-09 15:50:07 · 6 answers · asked by User 3 in Business & Finance ➔ Taxes ➔ United States
Depends on the service they provided. If its business related, then you can deduct the fees on the business return (1120, 1120S, 1065 or Schedule C). If it was personal, then only the portion that relates to tax advise would be deductible. So if you paid for a will, the portion that was for taxes would be deductible as a miscellaneous itemized deduction subject to 2% of your AGI. Ask your attorney for a detailed statement if there was any tax advice.
2006-07-10 03:05:15 · answer #1 · answered by extra_37 4 · 1⤊ 0⤋
If the settlement amount is taxable, then you claim the attorney fees as a miscellaneous itemized deduction subject to the 2% threshold. You used to be allowed to reduce the gross taxable amount by the portion that went to the attorney, but a recent Supreme Court case now requires that you report the full settlement as gross income (unless exempt as compensation for a personal PHYSICAL injury) and separately deduct the attorney fee.
2006-07-10 02:25:03 · answer #2 · answered by taxmannyc 3 · 0⤊ 0⤋
If the settlement proceeds are taxable, you should be able to deduct the attorney's fees (or possibly reduce the gross amount of the settlement that you include in income).
2006-07-09 17:37:32 · answer #3 · answered by TaxGuru 4 · 0⤊ 0⤋
Depending on what the settlent was for, souch as a personal injury, the amout, itself may not be taxible. If it was business realted and taxable, then the expenses are deductible.
2006-07-09 16:15:31 · answer #4 · answered by Anonymous · 0⤊ 0⤋
Only if this was in conjunction with a business that you are running. Otherwise not likely.
2006-07-09 15:52:55 · answer #5 · answered by Fun and Games 4 · 0⤊ 0⤋
Nope.... sadly enough
2006-07-09 15:52:53 · answer #6 · answered by Mopar Muscle Gal 7 · 0⤊ 0⤋