Are the fees of a lawyer tax deductible?
September 12, 2022 | 70,00 EUR | answered by Alice Schulz
Dear Lawyer,
I am contacting you with a question regarding the tax deductibility of legal fees. My name is Zofia Ullmann and I am currently facing a legal problem for which I need the assistance of a lawyer. However, since I do not have unlimited financial resources, I am concerned about whether the incurred lawyer fees are tax deductible.
The current situation is as follows: I am involved in a legal dispute that requires legal advice and representation from a lawyer. The associated fees are not insignificant and are putting additional strain on my budget. Therefore, I am wondering if there are ways to claim the costs of the lawyer on my taxes and thus at least partially relieve the burden.
My concerns mainly lie in not knowing whether I meet the necessary requirements for tax deductibility or if there are specific limitations to consider. Therefore, I urgently need clarity on whether and to what extent the fees of a lawyer are tax deductible.
My question to you is: Are the fees of a lawyer tax deductible, and if so, under what conditions and to what extent? Are there specific proofs or documents that I need for this purpose? I would greatly appreciate it if you could provide me with information on this matter so that I can better plan my financial situation.
Thank you in advance for your help.
Best regards,
Zofia Ullmann
Dear Mrs. Ullmann,
Thank you for your inquiry regarding the tax deductibility of legal fees. I am happy to explain the relevant information on this topic to you.
In general, the costs for legal advice and representation are tax deductible. According to § 33 of the Income Tax Act, expenses for legal advice can be claimed as extraordinary expenses. This is especially the case when legal advice is necessary to protect your own rights or to defend against a potential legal violation.
However, in order to deduct legal fees from your taxes, you must meet certain requirements. Firstly, the costs must have actually been incurred and be able to be proven. This means that you must provide an invoice or fee agreement showing the amount of the fees. Additionally, the legal service must be directly related to your professional or personal life.
Furthermore, the legal costs must be reasonable, meaning they must not be disproportionately high in relation to your income and assets. It is assessed individually whether the costs are considered reasonable.
It is important to note that the tax deductibility of legal fees falls under extraordinary expenses. This means that these costs are only deductible in certain cases and under certain conditions. It is recommended to consult with a tax advisor beforehand to ensure that the requirements for tax deductibility are met.
In summary, the fees of a lawyer are generally tax deductible if they are necessary and claimed as extraordinary expenses. Make sure to gather all relevant documents and evidence to ensure the deductibility of the costs.
I hope that this information was helpful to you and I am available to assist you with any further questions.
Kind regards,
Alice Schulz
Attorney at Law
