Can You Deduct Lawyer's Fees From a Divorce in New York?

Only part of a New York divorce lawyer's fees are deductible

For divorces in New York, as in every other state of the union, the IRS only allows deductions for that portion of the divorce lawyer's fees pertaining to advice given on tax matters.

Considerations

Divorce lawyer fees not pertaining to tax advice cannot be deducted from taxes in New York and other states. Divorcing parties in New York should seek an attorney with tax knowledge for clarification of IRS rules regarding attorney's fees and divorce.

Retirement Plans

Tax advice from New York divorce attorneys may be particularly helpful in cases where the property being divided by the divorcing couple includes funds held as pre-tax contributions to pension plans such as 401(k), Keogh or I.R.A. plans. In such cases a qualified domestic relations order (QDRO) will preserve the tax deferred status of the funds. The divorce attorney's fees for preparing a QDRO are tax deductible.

Maintenance

Lawyer fees paid by either husband or wife when seeking to collect spousal support, also called maintenance in New York, can be deducted under miscellaneous deductions on Schedule A of Form 1040 if they exceed 2 percent of adjusted gross income (AGI).

Billing

Divorce lawyers should provide clients with bills that break down fees and expenses by category to aid clients in deducting the tax-related expenses from their income taxes.

References

• Legal Fees For A Divorce: What Is Or Is Not Deductible by Julian Block, IVDGL.org
• Are Attorneys FeesTax Deductible, Taxation.lawyers.com
• Tax Issues (2006) by Linda King NewYorkDivorceAttorney.com
• Spousal Support, New York, DivorceNet.com

Resources

• Frequently Asked Matrimonial Questions, VictoryLibrary.com