Attorney’s fees for professional services by a divorce attorney can be deductible, but not in their entirety. Fees attributed to a dissolution of marriage are not deductible, which includes pleadings, court appearances, and non-tax related negotiations, custody, visitation, and child support fees. You can only deduct for services performed in connection with actual tax advice and/or advice that gives rise to taxable income. Only fees attributable to alimony, which is taxable to the recipient, qualifies for the production of taxable income. The alimony must be paid 1) in cash, 2) to or on behalf of the recipient, 3)pursuant to a decree or agreement, 4)as not designated as non-taxable, 5) for parties whose status of marriage changes and they live in separate households, 6) for a term ending with the death of the payee, 7) as not fixed as child support, and8) for parties who file separate returns.
Fees for collecting delinquent taxable alimony are deductible, as are fees for seeking an upward modification in alimony, but not downward. Fees for collection of child support are not deductible and neither are fees for obtaining or protecting income producing property.
Fees that are deductible can only be deducted as part of miscellaneous itemized deductions, and they must be aggregated with other miscellaneous itemized deductions, only to the extent that they exceed two percent of the taxpayer’s AGI (adjusted Gross Income). If the itemized deductions do not meet this threshold, then nothing is deductible.
Furthermore, in addition to the itemized deduction limitation, if AGI exceeds a particular thresh hold, the amount of itemized deduction allowed is reduced by 3% of the excess of AGI over the thresh hold or 80% of the amount of the itemized deductions allowable for the tax year.
If you wish to attempt to deduct fees for your divorce case, consult with a tax expert and ask your attorney for an itemized listing of the deductible and non-deductible fees charged for your case.
Source for Post – Family Advocate Vol 27 No. 3