The typical rule with deducting tax attorney fees is there is a relation between a court case and your income. For example, a criminal trial is in most cases not suitable for tax exemption. On the other hand cases such as personal injuries, divorce, business suits are part of this group.
If you find yourself in a situation when your income is questioned, such as divorce where your wife or husband attempts to get alimony, it is possible to deduct attorney fees. If you are in a case where your income is at question, a divorce, for example, where your spouse is trying to collect alimony, you will be able to deduct your attorney fees. It is essential that you keep your attorney fees separate from the case.
As far as personal injury cases are concerned, deducting attorney costs is acceptable if the money in question is tax-deductible income. In a case where the payment amount is not tax deductible, then it is quite probable that you won’t be allowed to deduce your tax attorney costs too.
As long as your legal matters are connected with your business, you are generally allowed to consider your attorney fees as part of your business expenses. As a result, a sued company can use their attorneys and then deduct their cost from company taxes.
The rules and regulations associated with tax deductions and legal fees are often very complex. You are strongly advised to contact a tax attorney before a court trial commences. You need to learn what costs are eligible for deduction and which you will have to be responsible for.