Divorce Attorney Fees

• As a general rule, most of the fees you pay to your divorce attorney are not deductible on your tax return. However, the IRS does make some narrow exceptions. If your attorney is able to secure an alimony payment agreement with your former spouse, the portion of the attorney's fee that relates to the alimony is deductible. As a result, you should request an itemized bill from your attorney so you can easily allocate the fee between deductible alimony and nondeductible fees. The only reason the IRS allows you to deduct this portion of the attorney fee is because any future alimony payment you receive is taxable income to you, and fundamental tax law principles allow taxpayers to claim a deduction for any expense that is helpful to earning taxable income.
  
  

Deductible Tax Consulting

• Another exception to the IRS rule of disallowing deductions for attorney fees is if part of the fee you pay is for tax advice that relates to your divorce. However, this deduction not only includes the legal assistance you receive but any CPA you hire as well. In addition, you can also claim a deduction for any actuaries and appraisers you hire for purposes of determining your correct tax bill as it relates to the divorce.
  
  

Tax Preparation Fees

• Although it need not relate to your divorce, the IRS allows you to claim a deduction for the tax preparation fees you pay to a CPA or other tax accountant. If you choose to prepare your tax returns yourself, you can claim a deduction for any tax preparation software you purchase as well as any books that provide guidance on how to prepare your return.
  
  

Tax Reporting

• All deductions for tax advice, tax preparation fees and legal fees that relate to alimony are deductible only if you choose to itemize your deductions in lieu of claiming the standard deduction. You can make this determination by comparing the total of your itemized expenses for the year with the standard deduction you can claim for your filing status. If itemizing yields a larger deduction, it's likely to save you more in tax. One caveat, however, is that all of these attorney and CPA fees are miscellaneous expenses subject to the 2 percent limitation. This means that the total of all your miscellaneous expenses, not just the attorney and accountant fees, are only deductible to the extent they exceed 2 percent of your adjusted gross income.