On top of the typical stresses of separating, you also have to pay attorney and court fees related to the proceedings. This leads many people to wonder – can I claim these costs on my taxes? Are divorce lawyer fees tax deductible?
Unfortunately, under current U.S. tax law, divorce attorney fees generally are not tax deductible. The IRS considers these fees to be personal expenses, as opposed to business expenses or costs incurred to produce income. Personal expenses typically cannot be deducted.
However, there are a few exceptions where you may be able to deduct some divorce-related costs:
- Fees paid to secure alimony can be deducted by the spouse making the payments. The recipient then claims the alimony as taxable income.
- Expenses for tax advice or representation during the divorce may be deductible as miscellaneous itemized deductions.
- In limited cases, attorney fees to secure business income impacted by the divorce settlement may qualify.
- See IRS Tax Topic No. 452: “Legal fees paid to secure alimony are deductible by the payer as alimony. Fees paid for advice on tax issues relating to a divorce are deductible as miscellaneous itemized deductions subject to the 2% of adjusted gross income limit.” https://www.irs.gov/taxtopics/tc452
But for most typical divorces that deal with dividing assets, child custody, and routine legal fees, you won’t be able to claim these costs as deductions. Discuss your specific situation with a tax professional to be sure.
While you can’t deduct divorce lawyer fees directly, some strategies like utilizing tax deferred retirement accounts to pay them may help offset the tax impact down the road. But in general, view paying attorney and court costs as a personal expense of untangling your marriage. With good planning and cooperation, you may be able to minimize the legal expenses incurred.