Can I deduct the lawyer's fees from my taxes?
September 3, 2022 | 60,00 EUR | answered by Ralf Hausdorf
Dear Sir or Madam,
My name is Maria Kraftner and I have a question regarding lawyer fees. I recently used the services of a lawyer to represent me in a legal dispute. Now I am wondering if I can deduct the lawyer fees from my taxes.
The situation is as follows: I had to take legal action to enforce my rights as I was involved in a dispute. The lawyer advised me and represented me in court. The bill for his services amounts to a considerable sum which I would like to deduct from my taxes.
My concern is that I may not be able to deduct the lawyer fees from my taxes and therefore be financially burdened. Therefore, I would like to know if there is a way to include the lawyer fees in my tax return and what requirements need to be met.
Can you please provide me with information on whether and under what circumstances I can deduct the lawyer fees from my taxes? Are there specific criteria that need to be met for the costs to be tax deductible? I would greatly appreciate it if you could help me with this question, as it is of great importance to my financial situation.
Thank you in advance for your assistance.
Sincerely,
Maria Kraftner
Dear Mrs. Kraftner,
Thank you for your inquiry regarding the possibility of deducting attorney fees from your taxes. It is understandable that you are concerned about the financial burden of the services of a lawyer and would like to know if you can claim these costs on your taxes.
In general, it is possible to deduct attorney fees from your taxes. These fall under the category of so-called extraordinary expenses according to § 33 of the Income Tax Act (EStG). This means that you can declare the costs for using a lawyer in your tax return under certain conditions to reduce your tax burden.
In order for attorney fees to be recognized for tax purposes, they must meet certain criteria. Firstly, the costs must be necessary to enforce or defend your rights. This means that hiring a lawyer in your case was unavoidable to resolve the legal dispute or settle a legal matter.
Furthermore, the attorney fees must be reasonable. This means that the amount of the costs should be in a reasonable relation to the value of the dispute or the importance of the legal matter. As a rule of thumb, the costs should be within a normal range to be recognized for tax purposes.
Additionally, it is important that you pay the lawyer's bill properly and can provide a detailed invoice. This should transparently break down the lawyer's services and the amount of the costs.
In your tax return, you can then declare the attorney fees as part of the extraordinary expenses. You should make sure to enter the costs under the appropriate section of your tax return and attach any necessary documents such as the lawyer's invoice.
Please note that the possibility of deducting attorney fees from your taxes may vary from case to case. Therefore, it is advisable to consult a tax advisor or a specialist lawyer in tax law to assess your personal situation and receive further tips on the tax deductibility of attorney fees.
I hope this information has been helpful to you. If you have any further questions or need assistance, I am at your disposal.
Sincerely,
Ralf Hausdorf
Lawyer and expert in fee law
