Attorney fees to get social security

[JenMO]

ARe they deductible or subtracted somewhere? Substantial amount of attorney fees on Social Security 1099, and added into TP's benefits. Sch A? somewhere else?

[Burke]

They are deductible to the extent the SS is taxable on the return. Sche A, subj to 2%.

[S T]

Attorney Fees for SS Award

From what I can determine the Attorney Fees for SSDI are a set amount which should be 25% of the "initial" award with a maximum of $ 5,300

Keep in mind if the SSDI is not taxable income, then there are no deductions for the attorney fees, or the attorney fee deduction must be in direct relationship to the amount of SSDI taxable.

Attorney Fee Deduction. If a taxpayer discovers that some of the Social Security lump sum - when added to regular benefits received in the same year - turns out to be taxable, the attorney fee may be deducted from income, but only to the same extent that Social Security is taxed. For example, if a taxpayer paid tax on 50% of SSA benefits received, the taxpayer may deduct half of the attorney fee paid or incurred during the same year. [IRS Revenue Ruling 87-102] The taxpayer faces the burden of filing an itemized return, of course, and this limited deduction is further subject to the “2% of adjusted gross” ceiling on miscellaneous itemized deductions.

Your client should have received an award letter which would give the initail amount, plus the amount of the attorney fees. Do not rely totally on the 1099SSA form as it could be incorrect.
Sandy

[JenMO]

Thanks, I don't think TP can itemize, but attorney fees might make a difference

[Burke]

Also check for special rules for reporting lump sum payments where benefits are included for a previous year.