Are Divorce Legal Fees and Court Costs Tax Deductible?

• Can I deduct divorce legal fees and court costs from my taxes?
• What about attorney fees? Can I deduct those?
• Are any fees tax deductible from my divorce?
• Reducing the cost of your divorce
• References

Unfortunately, it’s relatively rare that fees resulting from a divorce are tax deductible. Basically, the most common types of fees incurred won’t be tax deductible. 

It’s only in a few areas where a divorce intersects with things like business-related tax issues that there is generally the possibility to get some deductions. There used to be more areas where one could get tax deductions, such as for estate planning costs, but this has changed. 

Can I deduct divorce legal fees and court costs from my taxes?

In most cases, legal fees and court costs related to a divorce aren’t considered tax deductible. While it’s worth researching whether any tax deductions might apply to you, tax credits and deductions are generally designed to reinforce behaviors that are considered beneficial to the government or society. While divorce can be a personal necessity depending on the circumstances, it isn’t something that the government wants people to prioritize as a general rule.

For reference, the IRS discusses some of the most common credits and deductions on its website. Deductions are available in several spending categories including education, healthcare, and investment. 

As we discuss later, some legal fees incurred during a divorce may be tax deductible, but this isn’t the norm. Again, this is usually only in areas where divorce intersects with areas of finance where it’s more typical to get deductions. For example, you may be able to deduct certain legal expenses related to resolving business tax issues that are the result of the divorce. 

What about attorney fees? Can I deduct those?

Similarly, it’s rare for attorney fees incurred during divorce to be tax deductible. Divorce is notoriously expensive once attorneys are involved. You will generally need to pay the full cost of your attorney’s fees with no tax benefit. 

Note that "attorney fee" is a broad term that can cover personal legal advice, ongoing legal counsel, legal research, and more. As touched on earlier, there are rare cases where using this type of advice during a divorce may be tax deductible, but that is the exception and not the rule.

Are any fees tax deductible from my divorce?

Some fees may be tax deductible if related to the production or collection of taxable income or for the management, conservation, or maintenance of property used to produce income. A person might be able to see some tax benefit if they paid money during their divorce to get advice or resolve issues in the following areas.

General tax advice

In the past, it was often possible to get legal expenses related to producing and collecting taxable income deducted from one’s taxes. However, this has changed. The rules now only allow a smaller subset of legal expenses to be deducted. 

As a general rule, expenses for resolving non-business tax issues won’t be covered unless one is dealing with relatively old tax cases. 

Business income

If you own a business, legal expenses to resolve tax issues relating to profit or loss are often deductible. Also deductible are legal expenses related to doing or keeping your job, including fees incurred while combating criminal charges as a result of doing business or fighting discrimination cases. Of the areas discussed where you might be able to get tax deductions during a divorce, this is the most likely area. 

Estate planning

In the past, estate planning was tax-deductible, and this may be relevant when dealing with older divorce cases. However, this hasn’t been true for several years. As of the time of writing, you cannot get estate-planning fees deducted from your taxes, including any estate-planning fees incurred as the result of a divorce. 

Reducing the cost of your divorce

Estimates about the average cost of a divorce can vary (and change over time). On average, the cost of a divorce falls between $15,000 and $20,000, with the median cost of a divorce placed at about $7,000 in 2022. Considering that these fees usually won’t be tax deductible, it’s understandable that you would want to pay less, if possible.

Suggested: Will You Need to Pay Taxes on Your Divorce Settlement?

Hostile divorces where both parties actively dislike or otherwise are unwilling to negotiate with each other will almost always be expensive. But many divorcing parties are willing to at least try to settle their case cost-effectively. One of the best ways to reduce the cost of a divorce is by reaching a settlement out of court with the other party, where both parties negotiate issues like assets and child custody. If both parties can come to an agreement outside of court, they could end up spending hundreds rather than thousands of dollars.

If you and your ex want the smoothest path to divorce but disagree on some issues, mediation can be the best and least expensive option. A mediator will work as a neutral third party to help you both find common ground. While no one gets everything they want in a divorce, mediation can help you to get the things that are most important to you, while you may give up some of the things that matter less.

Want to know more about mediation? Hello Divorce makes it easy for interested clients to find and work with a mediator. Schedule a free 15-minute call with one of our account coordinators to find out more.

We also invite you to check out the following helpful mediation resources:

• 6 Steps to Take before You Begin Divorce Mediation
• Successful Divorce Mediation Tips and Tricks
• Divorce Mediation Checklist

References