Can I deduct the legal fees for my divorce proceedings from my taxes?
September 21, 2022 | 60,00 EUR | answered by Ralf Hausdorf
Dear lawyer,
My name is Phillip Heuser and I am currently in the middle of a divorce proceedings. I am wondering if it is possible to deduct the legal costs incurred during this process from taxes.
The situation is as follows: After a long marriage, my partner and I have decided to get a divorce. Since we could not find a mutually agreeable solution, we have each hired a lawyer to represent our interests. The costs for legal representation, however, are significant and are a financial burden for me.
My concern is that at the end of the divorce proceedings, I will not only be emotionally but also financially stressed. I am wondering if there is a way to at least deduct a portion of the legal costs from taxes to alleviate the financial burden.
Could you please explain to me if and under what conditions it is possible to deduct the legal costs for my divorce proceedings from taxes? Are there specific criteria that need to be met for these costs to be recognized? What documents or evidence are required for this?
Thank you in advance for your support and I look forward to your expertise on this matter.
Sincerely,
Phillip Heuser
Dear Mr. Heuser,
Thank you for your inquiry regarding the tax deductibility of legal fees in the context of a divorce proceeding. This question is of interest to many people in a similar situation to yours. I would be happy to explain the relevant information to you.
In general, the costs of legal advice and representation are tax deductible if they are related to securing, preserving, or obtaining income. In the case of a divorce, these are considered extraordinary expenses according to § 33 of the Income Tax Act (EStG). However, they must exceed the reasonable burden in order to be considered for tax purposes.
In order to deduct the legal fees related to your divorce from your taxes, certain requirements must be met. Firstly, the costs must be directly related to the divorce proceeding. This means that only the costs for legal advice and representation in connection with the divorce are deductible, not other costs such as alimony payments or costs for pension equalization.
It is also important that the costs can be proven. This includes the lawyer's invoices and all payment receipts to prove the amount of costs incurred. It is advisable to carefully keep all relevant documents in order to be able to prove, in case of an audit by the tax authorities, that the costs are indeed tax deductible.
Additionally, it is important that the costs are reasonable and not excessively high. The tax authorities typically review whether the costs are in proportion to the value of the dispute in the proceeding. Therefore, excessively high costs may not be fully recognized.
Overall, it is possible to deduct the legal fees related to your divorce from your taxes, provided that the aforementioned requirements are met. I recommend that you carefully inform yourself about the tax regulations and consider consulting a tax advisor to ensure that you submit all relevant documents correctly.
I hope that this information has been helpful to you and I am available for any further questions you may have. I wish you success and perseverance in your divorce proceeding.
Best regards,
Ralf Hausdorf
