Legal Fees

When can you deduct legal fees on your individual return? It is a little tricky, because it all depends on what the fees are for. If the fees are closely related to your taxable income, you can deduct them. If the fees arise from personal activities, then they are not deductible. For example, fees to collect alimony in a divorce are deductible, but fees related to child support are nondeductible personal expenses. Some more examples of nondeductible legal fees are the cost of preparing wills, non-tax estate planning, fighting a driver's license suspension, and establishing an irrevocable trust. It is always a good idea to have an attorney allocate his bill between tax matters and non-tax matters in estate planning and divorce situations so you can support your deduction.