Can I take a tax deduction for legal fees on my tax return?

Legal fees are generally tax deductible on your tax return if the dispute arose in the course of your business or employment or involves income producing property. The employment/income producing property legal fees are miscellaneous itemized tax deductions on your tax return and are subject to the 2% AGI floor. Legal fees for personal matters are generally not tax deductible on your tax return.

Legal Fees for Alimony
Legal fees to collect taxable income, such as taxable alimony (not all alimony is taxable), are tax deductible as miscellaneous itemized tax deductions on Form 1040, Schedule A. You should have your attorney divide his bill into:

non tax deductible divorce or separation charges;
tax deductible alimony charges (provided your alimony is taxable); and
charges relating to any property settlement which may be added to the tax basis of the property.

If you are paying tax deductible alimony you cannot deduct legal fees on your tax return for resisting or defending against your spouses/former spouses demands for alimony. Legal fees for disputes between you and your spouse/former spouse regarding income producing property are not tax deductible.

See also:
Can I deduct alimony paid to my former spouse on my tax return?

Legal Fees for Divorce
Legal fees for a divorce itself and for property settlement are not tax deductible on your tax return.

Legal Fees for Estate planning fees
To the extent that the services cover tax advice or regard income producing property the fees are tax deductible on your tax return.

Legal Fees for Personal injury suits
If your suit will recover a taxable award you may deduct the legal fees on your tax return. If the award is not taxable then the legal fees are not tax deductible on your tax return.

Legal Fees for Social Security
You may deduct legal fees on your tax return for collecting disputed Social Security only to the extent that your benefits are taxable on your tax return.

Legal Fees for Title disputes
Legal costs related to the acquisition of, or determination of title to property are non tax deductible capital expenditures that are added to the tax basis of the property regardless of whether the property is business or non business property.

Legal Fees for Will disputes
Legal fees of a will dispute are generally not tax deductible because your inheritance is not taxable income that you must report on your tax return.

Legal Fees for Wrongful death suits
Legal fees in a wrongful death suit are generally not tax deductible because the award is income tax free and thus not reportable on your tax return.

 Related tax information about taking a tax deduction for legal fees
Miscellaneous Itemized Tax Deductions
Itemized Tax Deductions Directory
IRS publications about legal fees:
For additional information, refer to Tax Topic 508, Miscellaneous Expenses, and IRS Publication 529, Miscellaneous Deductions. Also see IRS Publication 17, Your Federal Income Tax.
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