How to Deduct the Costs of a Divorce

Divorce is not only a stressful experience, it can also put significant strain on your finances. Divorces can be very expensive, particularly if they are hotly contested. Some of these costs can be offset by deducting the fees from your taxes. Expenses associated with getting the divorce are not deductible, but a number of ancillary services such as tax advice and fees related to alimony can be listed on Schedule A of Form 1040 to reduce your taxable income and cut your tax bill.

• 1

  Ask your attorney to provide an itemized bill showing the fee for each service provided. This allows you to go through every charge to determine if it fits the IRS rules for deductible expenses. Many attorneys will make this process easier by breaking out their bills into deductible and non-deductible fees. However it will still be your responsibility to verify that each fee listed as deductible actually meets IRS criteria.

• 2

  Add up all legal fees associated with tax advice. Divorce is likely to significantly change your tax status for the year as well as for future years. Many divorce attorneys also have tax law expertise, have tax departments in the firm, or consult with third-party accounting professionals to determine how the divorce will affect your tax status. Fees associated with all federal, state and local tax advice are deductible on your income tax.

• 3

  Total legal fees related to alimony. Although the cost of the divorce itself is not a deductible expense, charges associated with getting or collecting alimony are deductible. This can include charges in the initial divorce proceedings and expenses incurred later to collect alimony from non-paying ex-spouses.

• 4

  Total charges from other professional services involved in determining how the divorce will affect your taxes or in calculating or collecting alimony. These can include appraisal fees, tax advice or actuarial services.

• 5

  Itemize your deductions on Schedule A of Form 1040. You must itemize your deductions in order to claim expenses associated with your divorce. These costs will be included under Miscellaneous Deductions and are subject to the 2 percent limit, meaning only the portion of the total which exceeds 2 percent of your adjusted gross income will be deductible. See IRS Publication 529, Miscellaneous Deductions, for more information.