One of the biggest exceptions for tax deductions when it comes to divorce is the portion of legal fees paid to collect alimony. These legal fees (paid usually by the wife) are paid to collect the alimony that is taxable to her, and can be deducted on Schedule A of Form 1040. On this form, you can claim the fees in the “other expenses” line. But, there are even more exceptions to this deduction (as with any deduction you attempt to take for your taxes), including the exception that you can only take that deduction when the total of these fees exceeds two percent of the AGI (adjusted gross income). As an example, if the husband or wife (whoever is attempting to deduct these fees) has an AGI of $100,000, you can only deduct the fees if they are in excess of $10,000. Because this is rather complicated, one of the best things to do is contact your family divorce lawyer in Fairhope, AL, for more information about what you will be able to deduct from your taxes.
Fees for Tax Advice
If you do get advice from your lawyer, these fees are also deductible, but there are also some exceptions. If you get advice from your attorney on items like property transfers, dependency exemptions, and what can be deducted from your alimony expenses (like the problem above), these can be deducted, but only if your attorney’s bill specifies how much was for tax counseling. Another exception is that you can only deduct your own legal fees for tax advice. If you are paying for your spouse’s legal fees and they are about tax advice, you are unable to deduct these fees because you can only deduct your fees paid for advice you receive about your own tax problems.
The last deduction you can take for divorce related expenses are the fees you paid an attorney for getting an interest in a qualified retirement plan. If you are splitting all expenses, you’ll need to also split any retirement contributions and this is sometimes complicated, especially when you both have contributed to a retirement plan.
If you have more questions about what is deductible, be sure to contact Coumanis & York, P.C. for more information and to see how we can help you.