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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 13568
Experience:  15years with H & R Block. Divisional leader, Instructor
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My question is this: I was let go on my job because they

Customer Question

my question is this: I was let go on my job because they said the employment category was eliminated. I filed a lawsuit for my job back based on sexual harassment. Can i deduct my legal fees ? My case went to trial and I lost. They are making pay the legal fees of the employer.
Can I deduct them ?
Submitted: 11 months ago.
Category: Tax
Expert:  Robin D. replied 11 months ago.

Hello

You are allowed to deduct legal fees that are paid in the course of obtaining taxable income.

If you sued and received a settlement, the legal fees would be allowed as a deduction. The fees paid for the other party in the suit are not allowed as deduction unless you have taxable income form this suit that is shown on your return.

Unless you have taxable income that resulted from the suit, you cannot deduct the fees.

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Expert:  Robin D. replied 11 months ago.

Please post below

Customer: replied 11 months ago.
to be clear on the first part of the question, if I sue and lose: ie don't obtain taxable income - I am not allowed to take the deduction- even though my legal fees were for trying to recover my job ?
Expert:  Robin D. replied 11 months ago.

In short yes, but as with all tax situations it is complicated.

You could not claim legal fees in a lawsuit that was for sexual harassment unless you received taxable settlement from the suit.

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

Generally, one must look to the underlying lawsuit to determine which Code section applies. The IRS would look to the actual claims in the case if you were audited.

In order for IRC § 62(a)(20) to apply, attorney fees and court costs must have been paid with respect to a judgment or settlement occurring. Additionally, the suit must involve Unlawful discrimination.

The fees are still required to have a settlement or income resulting form the case that is taxable.

Expert:  Robin D. replied 11 months ago.

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