Can I Deduct Divorce Attorney's Fees?
Can I deduct the attorney’s fees and costs to get a divorce or support? Sometimes yes and sometimes no.
A divorce is a personal matter and personal expenses are usually not deductible so most of the expenses will not be deductible. However, if you have a business or itemize your deductions, there are five separate opportunities for deduction of part of the attorneys fees, accounting fees and other expert fees incurred incident to divorce proceedings.
Some common opportunities include the following:
1. Spousal Support: A person seeking spousal support or an increase in support can deduct the related attorney’s fees. A person seeking to reduce, eliminate or avoid spousal support paid to the other spouse gets no deduction.
2. Child Support: Child Support is not taxable income. The cost to seek or defeat child support is not deductible.
3. Business expenses: Valuing and dividing a business during the divorce process is a personal expense (no deduction). However, if the cost can be an “ordinary and necessary" business expense, a deduction might be allowed for the business if it pays the bill.
4. Tax advice: Attorney’s and accountant’s fees related to determining the tax consequences of support and settlement proposals is deductible. Most family law practitioners have little or no background in business, taxation or finance. Susan has been giving tax advice to clients for over 20 years. Every situation is different and the tax rules are very sensitive to changes in the facts. If you want to know whether you qualify for a tax deduction, contact your tax advisor.
Internal Revenue Code Sources for tax deductions: 1. IRC §162(a) ordinary and necessary business expense. 2. IRC §162 business expense of a controlled corporation joined as a party to the divorce. 3. IRC §212(1) expense for the production or collection of income 4. IRC §212(2) conservation of income-producing property 5. IRC §212(3) fee for tax advice 6. IRC §71 Alimony 7. IRC §215 Deduction for alimony payments