Taxes Tax Planning Are Attorney Fees Tax-Deductible? Most fees for personal legal work are not deductible; many for business are By Mark Cussen Mark Cussen Mark Cussen has been educating people on the subjects of life insurance, annuities, and retirement for more than 16 years. He has worked for many companies over the course of the past two decades, serving as a tax professional, financial counselor, estate planning guide, and more. All the while, he has written about tax preparation and life insurance for The Balance, as well as other finance sites like Money Crashers and Investopedia. Mark currently continues to freelance, and is also a member of the Estate Planning Team, which is a membership group of legal and financial service professionals dedicated to helping people preserve their wealth and protect their estates. learn about our editorial policies Updated on October 28, 2022 Reviewed by Ebony J. Howard Reviewed by Ebony J. Howard Ebony Howard is a certified public accountant and a QuickBooks ProAdvisor tax expert. She has been in the accounting, audit, and tax profession for more than 13 years, working with individuals and a variety of companies in the health care, banking, and accounting industries. learn about our financial review board Fact checked by Yasmin Ghahremani Fact checked by Yasmin Ghahremani Twitter Yasmin Ghahremani has over two decades of journalism experience and is an expert on personal finance topics, including credit cards, insurance, and loans. As an Associate Editorial Director, she sets The Balance’s standards for evaluating financial services, which include assigning, editing, and fact-checking articles. learn about our editorial policies In This Article View All In This Article Most Personal Legal Fees Are Not Deductible Personal Legal Fees You Can Deduct Many Business Legal Fees Are Deductible Frequently Asked Questions (FAQs) How do I claim deductions for qualified legal expenses? Photo: Lacheev / Getty Images If you are getting divorced, suing someone, or starting a new business, then you’re probably going to have to hire a lawyer. Most fees for personal legal work are not tax-deductible, but many for businesses, including rental properties, are. Let's delve into when legal fees are deductible for individuals and for small businesses. Key Takeaways With a few exceptions, individual taxpayers may not deduct legal expenses on their tax returns.Exceptions include legal fees in connection with an employment discrimination lawsuit and any amounts earned in connection with whistleblower suits.Businesses may deduct legal and professional fees if those fees were incurred in the course of conducting business. Most Personal Legal Fees Are Not Deductible With a few exceptions, most legal expenses related to personal issues are not deducted. Many were were prior to 2018, but the Tax Cuts and Jobs Act (TCJA) of 2017 changed tax law so that you may not deduct these types of fees. Specifically, you cannot deduct legal fees for: DivorceChild custody casesBuying real estate for personal use, including title expensesBreach of a marriage proposalCivil or criminal charges related to personal relationshipsPersonal injuryEstate planningProperty claims or settlementsTax issues or adviceDefending yourself against civil or criminal charges stemming from your participation in a political campaign Note The IRS does have special tax treatment for adoption expenses. You can claim the Adoption Tax Credit for qualified adoption expenses, including attorney and court fees, adoption fees, and travel expenses. You can also exclude income provided by your employer for adoption assistance. Personal Legal Fees You Can Deduct Taxpayers do still have a handful of personal legal fee deductions under current tax law. They include: Legal fees in employment discrimination cases (where the you as the taxpayer are the plaintiff): The deduction is limited to the total amount of the your gross income.Whistleblower rewards: In certain cases where you report someone for breaking a federal regulation, such as tax fraud or evasion, then you will be paid a percentage of the amount that was evaded if the person is caught. This deduction is limited to the amount that you are paid. Many Business Legal Fees Are Deductible The other side of the coin for taxpayers who are running or starting a business is that many business-related legal fees are deductible on Schedule C (Schedule E for rental or royalties income and Schedule F for farm income). If you are a businessperson, the legal fees you can deduct must be related to the profit or loss from a business, include those pertaining to: Collecting income from a customer (along with relevant court costs)Your business declaring bankruptcyHandling and caring for income-producing equipmentDefending your business or trade (but only as those fees that directly relate to the business—not to an individual, such as the owner or an employee)Drafting or negotiating contracts between you and your customersDefending any patent, trademark, or copyright claims Note Tax advice for your business is usually tax-deductible, unlike fees for personal tax guidance. Frequently Asked Questions (FAQs) Are legal fees tax-deductible for a rental property? You can deduct many legal fees related to rental properties if they're related to the production of taxable income, or to the management, conservation, or maintenance of an income-generating property.You cannot claim a deduction for legal fees related to getting, defending, or clearing a property, though you may be able to recover those costs through depreciation, depletion, or cost recovery. Can you deduct legal fees related to a child custody case? No, you can't deduct child custody lawyer fees or any legal fees related to a divorce. How do I claim deductions for qualified legal expenses? If you have expenses that are deemed deductible, you will need to itemize them on your tax return. That means you cannot take the standard deduction. Legal expenses related to your business should be itemized on Schedule C, E, or F (depending on the type of business).Fees related to whistleblower claims or unlawful discrimination claims should be included on Form 1040. Was this page helpful? Thanks for your feedback! Tell us why! Other Submit Sources The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy. Internal Revenue Service. "Publication 529, Miscellaneous Deductions," See 'Legal Expenses'. IRS. "Topic No. 607 Adoption Credit and Adoption Assistance Programs." Internal Revenue Service. "Publication 529, Miscellaneous Deductions." Internal Revenue Service. "Publication 535, Business Expenses," See 'Legal and professional fees'. Royal Legal Solutions. "Are Legal Expenses Tax-Deductible for Real Estate Investors?"