terry Posted March 12, 2010 Report Share Posted March 12, 2010 T/P received SSA-1099, attorney fees are also listed. Would these be deducted on Sch A subject to 2%? Would medical record fees tied to the disability income also be deducted? Thanks in advance! Quote Link to comment Share on other sites More sharing options...
RitaB Posted March 12, 2010 Report Share Posted March 12, 2010 You deduct the attorney fees that apply to the taxable SSA. In other words, if 50% of the settlement wound up being taxed, you deduct 50% of the attorney fee. Sorta like pastors not deducting the portion of expenses that apply to nontaxed income (housing allowance). And, you use line 28, so not subject to the 2% limit. You lost me on the medical fees. I would think any out of pocket medical expense is deducted, like always. (Well, you know, in excess of the 7.5% of AGI) Quote Link to comment Share on other sites More sharing options...
jklcpa Posted March 13, 2010 Report Share Posted March 13, 2010 And, you use line 28, so not subject to the 2% limit. I have one of these right now too. Not being subject to the 2% reduction would save my client a tidy sum in tax. Is this because you are considering the legal expenses as impairment-related work expense of a disabled person? I would have put this expense subject to the 2% as any other legal expense paid for the collection of income or preservation of income-producing property. Quote Link to comment Share on other sites More sharing options...
RitaB Posted March 13, 2010 Report Share Posted March 13, 2010 I have one of these right now too. Not being subject to the 2% reduction would save my client a tidy sum in tax. Is this because you are considering the legal expenses as impairment-related work expense of a disabled person? I would have put this expense subject to the 2% as any other legal expense paid for the collection of income or preservation of income-producing property. Well, according to Pub 915, p. 15 this deduction DOES indeed go on line 23. I am now just aggravated cause I KNOW I had this all figured out. I am sooooo sorry. Quote Link to comment Share on other sites More sharing options...
RitaB Posted March 13, 2010 Report Share Posted March 13, 2010 Well, I told you I was aggravated. I looked at a LSE I did in 2008, and I put the fees on line 28. I dug out another client's 2003 return, and I put the fees on line 22 (it's 23 now). I had a reason for thinking line 28 was correct last year. Wish I knew what it was. Things like this drive me crazy. Crazy, I tell you. Quote Link to comment Share on other sites More sharing options...
Terry D EA Posted March 13, 2010 Report Share Posted March 13, 2010 As mentioned earlier, Pub 915 page 15 shows the amount to be entered on line 23 which is subject to the 2% floor. Quote Link to comment Share on other sites More sharing options...
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