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I recently had a lawyer review an employment agreement for me. Are the fees tax deductible?


It’s not altogether clear, but a reasonable interpretation of what the Internal Revenue Service says on the subject suggests that you could consider the fees an unreimbursed employee expense and take it as an itemized deduction on Form 1040, Schedule A. The agency says that “you can deduct legal fees related to doing or keeping your job” on Line 21 of Schedule A. It also says that “legal fees related to producing or collecting taxable income…” are deductible on Line 23. Your situation seems to fall into one or the other of these categories, but if you’d like to be certain or if there’s a lot of money involved – that must have been one convoluted employment agreement! – the prudent move may be to see an accountant. But there may not be all that much at stake here. If you don’t itemize your deductions, there’s no write-off. Even if you do itemize and even if the fees are deductible, you’re only allowed to deduct them and other unreimbursed employee expenses that exceed 2 percent of adjusted gross income. I don’t know what other expenses you have in that category, but if the lawyer just looked over a few sheets of paper, it’s hard to imagine that he charged you more than 2 percent of your annual income for it.

-Conrad de Aenlle