Are Divorce Attorney Fees Tax Deductible in Virginia?

• Can I deduct divorce attorney fees on my Virginia taxes?
• Are any divorce fees tax deductible in Virginia?
• References

Divorce attorney fees aren’t usually tax deductible in Virginia or any other state. The only exception is if you’ve incurred divorce attorney fees related to running a business. Some divorces impact a business and cause it to incur fees it otherwise wouldn’t have. 

Part of the reason divorce legal fees can’t typically be deducted is the Tax Cuts and Jobs Act (TCJA). The TCJA greatly changed the landscape of how divorces and taxes intersect. 

Can I deduct divorce attorney fees from my Virginia taxes?

Most attorney fees incurred as part of the divorce process cannot be deducted from your taxes, in part because of the passing of the Tax Cuts and Jobs Act (TCJA). Many of the changes made by this law are controversial. Most will continue until at least 2025 (and possibly, beyond if Congress chooses to extend any of the rule changes). 

While some legal fees can be claimed, most divorce attorney fees qualify as personal expenses that cannot be deducted. As we discuss in the next section, the only fees pertaining to divorce that tend to be tax deductible are those relating to businesses. But even then, these costs are inherently tax deductible because of the divorce. Rather, they may be deductible because they relate to a business.

If your attorney advises you on business issues even somewhat related to your divorce, those fees could be tax deductible. 

Is this true in all states?

While state tax law can vary, the law tends to be fairly united when it comes to changes implemented by the TCJA, which is itself a federal act. It’s best practice to research the laws specific to your state, but you can generally expect that divorce attorney fees won’t be tax deductible. 

Are any divorce fees tax deductible in Virginia?

While some legal fees are indeed tax deductible, most deductible fees aren’t related to divorce. A few fees related to divorce may be tax deductible if they are specifically related to the production or collection of taxable income or for the management, conservation, or maintenance of property used to produce income. 

Standard business expenses

Legal fees related to running a business, including renting out properties, can be deducted in many cases. In Virginia, if you are involved in an actual case related to running a business, these fees are usually tax deductible. You can still claim deductions on eligible fees if they were paid toward a case you didn’t win. 

Business tax help

You can also usually deduct legal fees paid to get tax advice or for help preparing taxes for a business. This isn’t typically true if you’re paying an attorney for similar help with your personal taxes. 

The reasoning behind this is somewhat debatable, but the law often favors income-generating ventures like running a business. In general, the taxes related to running a business can also be more complex than those related to having a standard job. 

Suggested: How 2017's Tax Bill Changed How Alimony Is Taxed

References