Only legal fees directly related to the business are eligible for tax deductions, not those related to individuals, such as owners or employees. Legal fees are deductible as a business operating expense. If you are a sole propriator, these fees are deducted on IRS Schedule C; if you are a landlord, they are deducted on Schedule E. See list of legal matters for which legal fees are deductible.
The following is an incomplete list of legal services that are eligible for tax deductions and corresponds with the legal services that our law firm provides. To ensure accurate deduction of legal fees on your income tax return please consult with your accountant for tax advice.
You can deduct legal fees paid for:
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Start-up expenses: to form a company;
- Defending your business in litigation;
- Negotiating or drafting business agreements;
- Collecting money owed to your business;
- Legal fees you incur in the course of your rental activity, if your rental activity is considered a business. Example, attorneys' fees incurred to evict a tenant.
- Defending against trademark and copyright claims.
