Yardley CPA Posted March 21, 2015 Report Share Posted March 21, 2015 Divorced client included letter from her attorney stating that a portion of her fees may be tax deductible. Here's what the letter states: " Please be advised that it is my opinion that a portion of your 2014 legal fees with regard to your matrimonial matter may be tax deductible in that they may relate to tax information, and preservation and conservation of income In 2014, you paid a toal of $X,XXX in legal fees for services rendered. It is my belief that some of these legal fees may be considered a miscellaneous itemized deduction; however, you must consult with an accountant or tax attorney to determine if you can claim any portion of the above as a deduction. I strongly recommend that you consult with your own tax advisor with regard to this deduction." While I understand that legal fees may be deductible, in this case its mentioned that "some" of the fees may be considered miscellaneous itemized deduction. The bill my client received from her attorney was not itemized in any way and as such, I am having trouble determining which portion may be deductible? I can ask for an itemized bill (if there is such a thing) but before doing so wanted to seek your opinion. Can anyone lend some guidance? Thank you! 1 Quote Link to comment Share on other sites More sharing options...
Lion EA Posted March 21, 2015 Report Share Posted March 21, 2015 (edited) I have told clients to get an itemized bill. But, if I have their other information, I give them an estimate of what their 2% floor is likely to be. If the client's here with me, we have called the lawyer to see if his potential deductible fees are higher than that -- because he'll probably charge her to itemize her bill, too! If original divorce fees, probably not a big $ amount of his bill is for getting or keeping income, unless they had businesses, rentals, sources of income to divide up, besides just alimony. (Child support is not income/deduction, so legal fees re child support won't be deductible.) If a return to court to negotiate a change, might be a large amount of the fees to get/keep income. You can give client info re 2% floor and let him/her use judgement re getting more details from lawyer. Edited March 21, 2015 by Lion EA 3 Quote Link to comment Share on other sites More sharing options...
ljwalters Posted March 21, 2015 Report Share Posted March 21, 2015 Lawyers are suppose to give itemized bills when requested should be no charge. But then again it is a lawyer and they do what they want/ Quote Link to comment Share on other sites More sharing options...
JohnH Posted March 22, 2015 Report Share Posted March 22, 2015 (edited) In most cases the problem resolves itself. If the 2% harcut doesn't wipe out the benefit of the deduction, then there isn't enough income on the return for the deduction to matter very much anyhow at the client's marginal rate. So unless there is a business to divide or some other sizable income-related issue, the calculation is a waste of time. Nice how the lawyer knows enough about tax law to know there may be SOME deduction, but conveniently hasn't bothered to know enough to know the client needs a breakdown of the fees. Typical buck-passing maneuver. Edited March 22, 2015 by JohnH 1 Quote Link to comment Share on other sites More sharing options...
kcjenkins Posted March 23, 2015 Report Share Posted March 23, 2015 Sounds like the lawyer is hoping to get the client's tax professional to give him a free tutorial, IMHO. Quote Link to comment Share on other sites More sharing options...
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