Are Attorney Fees for Divorce Tax Deductible?

It is common for individuals undergoing divorce to inquire about the tax deductibility of attorney fees. While legal expenses can be substantial during this period, the Internal Revenue Service (IRS) has specific guidelines determining what, if any, of these costs can be deducted on a federal income tax return. Understanding these rules can help clarify the financial implications of divorce proceedings.

General Non-Deductibility of Divorce Attorney Fees

Generally, legal fees paid for a divorce are considered personal expenses by the IRS and are not deductible on federal income tax returns. This includes costs associated with child custody, property division, or general legal advice related to the divorce process.

The Tax Cuts and Jobs Act (TCJA) of 2017 suspended most miscellaneous itemized deductions for tax years 2018 through 2025. This category previously allowed for limited deductions for certain legal fees, which are now unavailable. Consequently, most legal costs incurred during a divorce remain non-deductible personal expenses.

Specific Deductible Categories

Despite the general rule, certain legal fees related to a divorce can be deductible. Fees paid for tax advice concerning the divorce, such as guidance on property settlements, alimony, or child support implications, are deductible. For these fees to qualify, the attorney must clearly itemize and separate them on the billing statement from non-deductible services.

Another exception relates to fees paid for the production or collection of taxable alimony. For divorce agreements finalized before December 31, 2018, legal fees incurred to secure or collect taxable alimony may still be deductible, as alimony payments were generally taxable to the recipient and deductible by the payer prior to 2019. However, the TCJA changed the tax treatment of alimony for agreements entered into after December 31, 2018, making it generally non-taxable to the recipient and non-deductible by the payer, which impacts the deductibility of associated legal fees.

Legal fees paid to produce or collect other taxable income, such as securing interest, dividends, or other income-producing assets during the divorce, can also be deductible. This applies if the legal work directly relates to protecting or producing taxable income. These specific services must be clearly delineated on legal invoices to support claimed deductions.

Reporting Deductible Fees

Taxpayers claim qualified deductible legal fees as itemized deductions on Schedule A (Form 1040). While certain miscellaneous itemized deductions were historically subject to a 2% adjusted gross income (AGI) limitation and are currently suspended, legal fees for tax advice or the collection of taxable alimony (under pre-2019 agreements) are treated as other itemized deductions. The suspension of miscellaneous itemized deductions does not impact these specific deductions.

Accurate record-keeping is necessary when claiming these deductions. Taxpayers should retain detailed invoices from their attorney that clearly separate deductible services, such as tax advice, from non-deductible personal services. Consulting a tax professional is advisable to ensure accurate reporting and to navigate these tax rules.