Is my contract lawyer tax deductible?

February 7, 2015 6:46 PM

in 2014, I went from one job to another, and part of that transition was negotiating a contract with my new employer. As part of the negotiation, I hired a lawyer to help me with the contract terms, which ended up costing me a decent chunk of money. My question: Can I deduct this money from my taxes? is it a job expense? I am thinking the answer is no, but I would love to be able to deduct that money.
posted by to sir with millipedes to Law & Government (5 answers total)

I am not an accountant, but I would definitely deduct it. So if nothing else my answer should give you hope and courage to keep pushing until you get an answer.
posted by cacao at 6:58 PM on February 7, 2015

Rules for deductions.

"Legal Fees

You can deduct legal fees related to doing or keeping your job."

^Has to be ordinary or necessary.

This is probably the sort of thing you need a tax accountant for, but before you go to that step, make sure this + all other misc deductions are at least 2%, otherwise you've wasted your time. The link above includes the others allowed, so worth a look.
posted by Trifling at 7:31 PM on February 7, 2015

*If* it's deductible, it would be under the provision noted by Trifling; that is, under IRC sec. 212.

Note, however, that this is a miscellaneous itemized deduction meaning (a) you'd have to be itemizing your deductions and (b) you can deduct only the amount that exceeds 2% of your AGI (so if you make 50K/yr, the first 1K of misc. itemized deductions is not deductible).

Also, the impact of the deduction may be reduced due to AMT.

Your state provisions may be different.
posted by melissasaurus at 7:37 PM on February 7, 2015

I think this would be a 162 deduction: deductible as a trade/business expense. The relevant test is whether the new job is in the same field you've been in or a new field. If the latter, it's non-deductible, if the former, it is probably deductible.
posted by jpe at 5:05 AM on February 8, 2015 [1 favorite]

Don't forget to issue your lawyer a 1099. It's usually required in order to deduct trade or business legal fees. This link may or may not be helpful.
posted by MattD at 6:06 AM on February 8, 2015