Deducting Your Divorce Fees

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March 24, 2011

As April 15th fast approaches, it is important to remember that certain attorney fees are deductible on your tax return. This can result in a substantial savings to you.

Although the general rule is that the fees paid to attorneys, accountants, appraisers, and other experts in connection with divorce, child custody, and paternity matters are not tax deductible, there are instances where professional fees are deductible.

For example, since ordinary and necessary expenses paid or incurred for collection of income during the taxable year may be deductible, you may be able to deduct fees incurred in obtaining spousal support, or in collecting delinquent spousal support. Accountant’s, appraiser’s, actuary, or vocational counselor’s fees are tax deductible to the extent their work involves obtaining spousal support. Fees and costs in connection with spousal support modification proceedings are also tax deductible.

Certain business expenses that are ordinary and necessary in the conduct of business are also deductible. Although divorce-related attorneys’ fees are not considered a deductible business expense, in certain instances, attorney’s fees incurred in connection with a divorce may be deductible as miscellaneous, itemized deductions on your individual tax return. There are limits on the deductions, however, and they are also subject to the alternative minimum tax.

Ask your accountant about deductions that you may be entitled to. It could make for a happier April 15th than you anticipate!