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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 28084
Experience:  Taxes, Immigration, Labor Relations
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i made 20k in regular gross wages. I received a wage settlement

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i made 20k in regular gross wages. I received a wage settlement of 30k my total yearly wages is now 50k. I have 15k in attorneys fees can i expense off all 15k atorneys fees? What sort of AGI am i looking at ? I am sinlge with normal deductions i dont own anything

Lev :

Hi and welcome to our site!
You must report the full amount you received and may deduct the full amount of your legal expenses (including attorneys fees).

Customer:

nice!! what kind of deduction am i looking at ? what is my new AGI after normal deductions and attorney fees of 15k

Lev :

There are special rules for deduction for costs involved in unlawful discrimination suits (including settlements). Generally - you can claim this deduction as an adjustment to income on Form 1040, line 36. So your AGI would be 20k+30k-15k=35k.

Customer:

tax on 35k would be about 5k$

Lev :

Let me estimate - please stay with me...

Customer:

thank you fo all your help much appreciated

Lev :

Assuming - you are single - standard deduction - no other deductions or credits - with your income level - your estimated federal income tax ~$3300
California income tax is extra ~$700

Customer:

thank u very much

Lev :

Please be aware that deduction for legal costs on Form 1040, line 36 - as an adjustment to AGI is allowed ONLY for unlawful discrimination suits (including settlements) - so you need to be sure that your settlement qualifies as a claim of unlawful discrimination under various provisions of federal, state, and local law.

Customer:

thank u

Lev :

Please be sure to rate my work accordingly - so I would be credited.
My goal is to provide EXCELLENT service.
You are welcome back for all your tax related questions.

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