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Are My Oregon Divorce Attorney Fees Tax Deductible?

Normally family attorney fees are not tax deductible. Read below to see the exceptions.

"Are My Lawyer Fees Tax Deductible?"

If you or a family member have found yourself in the middle of a divorce, custody dispute or other family law issue, you are probably well aware that hiring the right lawyer is worth the expense, and often is not inexpensive. In other words, despite the cost, you know how important it is to have a properly trained and prepared attorney to represent you in what, for many, is the most important battle of many peoples’ lives.

If you are like so many of our clients, you are contemplating divorce or are in the middle of the divorce process. With this inevitable step comes securing of legal representation to help you achieve your desired results and the payment of attorney and lawyer fees whether in the form of ongoing trust deposits or a flat fee. With money spent securing a better future for yourself and your family, you might be wondering, “are my lawyer fees tax deductible?”

Attorney Fee Tax Deduction In New Tax Law?

This has become a popular question following the semi-recent passage of the Tax Cuts and Jobs Act of 2017 (TCJA). On December 22, 2017, the most sweeping tax legislation since the Tax Reform Act of 1986 was signed into law. The Tax Cuts and Jobs Act of 2017 made several significant changes to the individual income tax, including reforms to itemized deductions and the alternative minimum tax, an expanded standard deduction and child tax credit, and lower marginal tax rates across brackets. As it relates to the deductibility of attorney fees in a divorce proceeding, the passing of the TCJA has largely eliminated many legal deductions and made them void for the foreseeable future.

Generally, under Oregon law, attorney fees incurred during the course of a dissolution of marriage action or as a result of a divorce or other family law matter are no longer tax deductible as they are considered a “personal expense.” A party may only deduct legal fees related to doing or keeping their employment, but may not deduct the costs of counseling, litigation or personal advice.

Other Eligible Legal Tax Deductions to Explore

Fortunately, there are other eligible legal deduction options to explore. If in the course of your divorce case, you incur legal fees that are directly related to your business or employment as an independent contractor, you will be able to use the IRS Form Schedule C to claim a tax deduction. Understand that such a deduction will require extensive documentation and will need to relate directly to the business; however, some attorney fees costs may be explored under this deduction option such as business valuations and business appraisals. You should have a good bookkeeper and CPA to help you explore this option.

Let Us Help Protect You

Although nothing in this FAQ should be considered legal advice, if you would like to have a confidential discussion regarding your divorce case and whether or not your attorney fees can be deductible on taxes based on the specifics of your case, please do not hesitate to contact us. Our team of top divorce attorneys in Oregon are experienced in all areas of marital law, so you have peace of mind that you are in good hands.