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Divorce Attorneys Fees May Be Tax Deductible

Many people are not aware that a portion of their attorneys fees in divorce related litigation or settlement may be deductible for income tax purposes. Every person involved in such a matter should consult with their CPA on the front end to see what types of attorneys fees are deductible. Once that is determined, clients should ask their attorneys to identify those types of expenses in their billing as they work on the case. This will assist in obtaining the deduction with the IRS.

This is a complicated area with many intricate “in’s and out’s.” For example, a recent tax ruling held that fees in a divorcing couple’s dispute over the character of property as marital or non-marital were not deductible, but those fees attributable to collecting a share of the rents from the real estate were deductible. (The Kiplinger Tax Letter, citing Est. of Melcher, TC Memo. 2009-210)