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What Legal Fees Can I Deduct?
Legal fees concerning real estate rental properties or businesses are properly deducted on the schedules for those activities.
On Schedule A, as a miscellaneous itemized deduction, you can generally deduct legal fees related to:
- Investment property that produces taxable income.
- Work-related civil lawsuits, needed to safeguard your employment.
- Tax advice or audit representation.
- Collection matters if the resulting income will be taxable (i.e., alimony, punitive damages, recovery of income, etc.).
You cannot deduct personal legal expenses, such as expenses of drafting a will or trust, divorce proceedings, collection of child support, or matters involving income exempt from income tax.
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