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Above the line deductions for legal fees

Forum|Forum|6 years ago
February 22, 2020
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How do I report “above the line” legal fees from an unlawful discrimination claim on the 2019 forms?

Best answer by rjs

Officially TurboTax does not support the above-the-line deduction for attorney fees for an unlawful discrimination claim. It is listed in the Unsupported Calculations document. However, it can still be entered in forms mode in TurboTax for 2019. Forms mode is available only in the CD/Download TurboTax software, not in TurboTax Online.

Here's how to enter the above-the-line deduction for attorney fees for an unlawful discrimination claim in TurboTax. In forms mode open the "Form 1040 or Form 1040SR Worksheet" (1040/1040SR Wks). Scroll down to the Schedule 1 section (Additional Income and Adjustments), then to Part II Adjustments to Income, and then to the Other Adjustments to Income Smart Worksheet between lines 21 and 22. The attorney fees are entered on line H of the Smart Worksheet. In the text entry box on the left side, right after the H, enter UDC. Enter the amount in the space on the right. The letters UDC and the amount will then appear on the dotted line to the left of the amount on line 22, and the fees will be added to any other amount that was already on line 22. The same notation, UDC and the amount, will appear on line 22 on Schedule 1.

Refer to IRS Publication 525 for important additional information about this deduction.

L

linaj20201

I am relating a post from user rjs who provides fairly thorough instructions on how to enter the information in the desktop version. You would need to manually enter it. The online edition does not support this entry. See the instructions above.

Please also continue to read:

With the new tax reform TCJA, it eliminates miscellaneous itemized deductions including the legal fees. Prior to the 2017 Act, you could deduct legal fees that were greater than 2% of your adjusted gross income as a miscellaneous expense. However, not anymore after 2017. However, there are still some legal fees that might qualify for an above-the-line deduction against your gross income like discrimination or Trade & Business related.

[Edited 2/25/2020 |10:13 AM]

Panta RheiAuthor

I am not seeing anywhere to enter that information. There is no "Less Common Income" showing under the Wages and Income tab. I am using Turbotax Deluxe.

macuser_22

Employee

@Panta Rhei wrote:

I am not seeing anywhere to enter that information. There is no "Less Common Income" showing under the Wages and Income tab. I am using Turbotax Deluxe.

As @rjs said above - this CANNOT be done in the online versions since it is not supported. It can only be done in the CD/download desktop version installed on a Mac or Windows computer in the "forms mode" so that you can make direct form entries and not in the interview.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

rjsAnswer

Employee

Officially TurboTax does not support the above-the-line deduction for attorney fees for an unlawful discrimination claim. It is listed in the Unsupported Calculations document. However, it can still be entered in forms mode in TurboTax for 2019. Forms mode is available only in the CD/Download TurboTax software, not in TurboTax Online.

Here's how to enter the above-the-line deduction for attorney fees for an unlawful discrimination claim in TurboTax. In forms mode open the "Form 1040 or Form 1040SR Worksheet" (1040/1040SR Wks). Scroll down to the Schedule 1 section (Additional Income and Adjustments), then to Part II Adjustments to Income, and then to the Other Adjustments to Income Smart Worksheet between lines 21 and 22. The attorney fees are entered on line H of the Smart Worksheet. In the text entry box on the left side, right after the H, enter UDC. Enter the amount in the space on the right. The letters UDC and the amount will then appear on the dotted line to the left of the amount on line 22, and the fees will be added to any other amount that was already on line 22. The same notation, UDC and the amount, will appear on line 22 on Schedule 1.

Refer to IRS Publication 525 for important additional information about this deduction.

macuser_22

Employee

Also refer to the 1040 instructions page 90 for Line 22.

https://www.irs.gov/pub/irs-pdf/i1040gi.pdf

"Line 22

• Attorney fees and court costs for
actions involving certain unlawful discrimination
claims, but only to the extent
of gross income from such actions
(see Pub. 525). Identify as “UDC.”"

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**