Are Attorney Fees Deductible In Divorce Cases?
Some are and some are not. Attorney’s fees incurred to obtain an order of spousal support are deductible as are attorney’s fees incurred to divide pension and retirement plans. Attorney’s fees for work concerning child custody and child support are not deductible. Work relating to the division of community property assets may be deductible if a component of the lawyer services relate to the tax ramifications of the particular division plan.
Lawyers commonly prepare Qualified Domestic Relations Orders which are used to divide pensions and retirement accounts. These expenses are deductible.
Legal fees and expenses associated with the lawyer’s work relating to obtaining a court order to receive spousal support or to collect past duel support are deductible. You will be taxed on the spousal support and retirement/pension money. Thus the fees you expend to obtain the money are deductible. The payer cannot deduct the attorney’s fees or costs for opposing a request for spousal support or opposing the collection of past due spousal support.
Legal fees for an award of child support or to collect past due child support are not deductible because unlike spousal support child support is not taxable to the recipient and cannot be deducted by the payer. Lawyer’s fees for work concerning custody are never deductible.
The division and transfer of property in the context of divorce may or may not have a tax issue. If it does the work on the issue is deductible.