Tax-Deductible Legal Fees

If you receive child or spousal support, and you spent money obtaining a court order to get child or spousal support then the money spent to get the order may be tax-deductible to you. Calculating the amount of the deduction is usually estimated by the lawyer who provided the service and may be based on the number of issues dealt with by the lawyer during the case.

The following conditions are generally necessary before legal fees and disbursements can be tax-deductible:

  1. The fees were paid by a support recipient to obtain, or enforce, or increase an order for child or spousal support, or to defend a reduction of child or spousal support;
  2. The tax deduction is used by the support recipient in the year the fees and disbursements accrued; and
  3. If you are awarded costs by the court and they are received in the same year you are making your tax deduction claim, then the amount received for costs must be offset against the amount claimed as a tax deduction. For example:
  4. Legal fees and disbursements claimed $1,000
    Costs received in same year – $500
    Tax deduction allowed = $500

If the costs are received after the tax deduction is claimed, then the money received as costs will be considered taxable income in the year received.

A payor of support cannot deduct his or her legal fees or disbursements.

Taxpayers cannot deduct legal fees incurred to establish custody or access of children, obtain a divorce, negotiate a separation agreement, or to collect lump-sum spousal support.

Whether or not your legal fees are tax-deductible can only be accurately answered by someone proficient in tax law. Having a family lawyer who has tax and other lawyers close by to consult is a definite advantage.

By Patrick M. Gaffney, practicing family law at Pushor Mitchell
Edited by Melodie Lind, practicing tax law at Pushor Mitchell

The information in this article is not to be taken as legal or tax advice and is provided for information purposes only.

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