If you are receiving taxed alimony, you may deduct part of your legal fees. Ask your attorney to divide his or her fees into charges for arranging: (1) the divorce or separation and (2) details of the alimony payments.
You may be able to deduct the legal fees allocated to (2), but you may not deduct the fee attributed to the divorce or separation negotiation. However, the deduction is subject to the 2% adjusted gross income (AGI) floor on miscellaneous itemized deductions (19.1) and if you are subject to alternative minimum tax, the deduction is not allowed for AMT purposes (23.2). If the alimony is not taxed to you, you may not deduct any part of the fee. However, part of a fee allocated to a property settlement may be added to the basis of the property.
If you are paying deductible alimony, you may not deduct legal fees paid for arranging a divorce or for resisting your spouse’s demands for alimony. Furthermore, you may not deduct legal fees incurred in resisting your spouse’s claims to income-producing property the loss of which would affect your earnings. That part of your legal fee that is identified as being paid for tax advice is allowed as a miscellaneous itemized deduction subject to the 2% AGI floor (19.1), but no deduction is allowed for AMT purposes.
Whether you are paying or receiving alimony, the following types of proof may support a miscellaneous itemized deduction for the part of the fee allocated to tax advice:
18.226.98.208