Are Your Florida Legal Fees Deductible?

Whether Florida attorneys' fees are deductible depends on the nature of the underlying claim. If the character of the claim brought is for business purposes, the fees are deductible; if the underlying claim is personal, the attorney fees are not deductible.

To recover attorneys' fees from the opposition, the prevailing party must show that the underlying claim was business related. Otherwise, the attorneys' fees are not deductible. Additionally, the ruling in Commissioner v. Banks, clarifies that even if such fees are deductible, they qualify as an itemized deduction, and as such, are subject to the 2 percent floor, mandated by I.R.C. Section 68. 543 U.S. 426 (2005).

However, as part of the American Jobs Creation Act of 2004, Section 62(a)(20) was implemented which allows for attorneys' fees incurred in connection with any action for unlawful discrimination to be deducted. Additionally, this section provides that attorneys' fees incurred for this specific purpose are not considered itemized deductions that would be subject to the 2 percent floor.

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