Can I deduct the costs for my lawyer from my taxes?
November 18, 2023 | 60,00 EUR | answered by Ralf Schröter
Dear Sir or Madam,
My name is Leon Krebs and I have a question regarding the tax deductibility of legal fees.
The background is as follows: I have recently had to seek legal assistance more frequently, whether it be in enforcing my claims against a company or resolving a tenancy dispute. As a result, the costs for my lawyer have increased significantly and I am now wondering if I can claim these expenses on my taxes.
Currently, I have already paid the invoices from my lawyer and am now considering whether it is possible to deduct these costs from my taxes. However, I am unsure as I have no previous experience with this issue and unsure if and to what extent these costs are tax deductible.
My concerns are that legal fees represent a significant financial burden and I would like to know if there is a way to reduce this burden through tax deductions. I am aware that not all costs are deductible and that there are certain regulations and requirements to consider.
Therefore, I would like to know if and to what extent I can deduct the costs for my lawyer from my taxes. Are there specific requirements that need to be met? What documents do I need to provide for this? Are there any limits to the deductibility of the costs? I would greatly appreciate clarification on this matter.
Thank you in advance for your assistance.
Sincerely,
Leon Krebs
Dear Mr. Krebs,
Thank you for your inquiry regarding the tax deductibility of legal fees. It is understandable that you are concerned about how to reduce the financial burden of your lawyer bills. I am happy to explain the relevant information on this topic to you.
In general, legal fees can be claimed as extraordinary expenses in your tax return. This means that you can deduct the costs of your lawyer under certain conditions. However, not all costs are fully deductible and there are certain regulations that you must follow.
In order to deduct legal fees for tax purposes, they must be considered as extraordinary expenses. This is the case when the costs arise unavoidably and you have no choice but to incur them. In your case, where you had to seek legal assistance to enforce your claims against a company or resolve a tenancy dispute, these requirements are likely to be met.
It is important that you keep the invoices from your lawyer carefully and include them in your tax return. You should also ensure that the invoices meet the legal requirements and contain all necessary information. This includes the name and address of the lawyer, the date of the invoice, the description of the services provided, and the amount.
However, there are limits to the deductibility of legal fees. Firstly, you must bear the costs yourself and not have received reimbursement from another party. Secondly, there is a reasonable burden threshold up to which extraordinary expenses are tax-deductible. This threshold depends on your income, marital status, and number of children.
Overall, legal fees can generally be tax-deductible as extraordinary expenses, provided that the requirements are met. Therefore, it is worth declaring the costs in your tax return and providing the relevant documents.
I hope that this information has been helpful to you and I am happy to answer any further questions you may have.
Best regards,
Ralf Schröter
