Generally, you cannot deduct legal fees for divorce, custody and other related matters for a Massachusetts divorce. However, the IRS permits a deduction for the legal advice you received from your lawyer relating to alimony/spousal support.
Spousal support is generally taxable to the recipient and tax deductible to the spouse paying support. Many divorce cases involve hours of discussion and legal advice regarding and surrounding spousal support. To the extent you receive tax advice about alimony, that portion of the bill is deductible as a miscellaneous expense if you itemize.
To make it clear to the IRS how the spousal support is treated from a tax perspective, make sure you have the taxability to the recipient clarified in your settlement agreement. If you intend to take the deduction, you must have your attorney clearly itemize the tax-related portion of your bill from the personal part.
As miscellaneous expenses, qualifying costs are deductible only to the extent all your miscellaneous expenses exceed 2% of your adjusted gross income. If you had a contentious divorce case that included a lot of legal advice about spousal support, you could have a large deduction.
Should you be in the midst of a divorce or contemplating divorce, contact the Law Offices of Renee Lazar either through email or telephone 978-844-4095 to schedule a FREE one hour no obligation consultation.