Social Securtiy Lump Sum & Attorney fees question

[nwtaxlady]

Taxpayer received a lump sum for Social Security for past couple years. Income is high enough to where it would have been taxed in previous years. So in box 5 is the total of $48,658. And attorney fees are $6,000. I know attorney fees are only deductible when trying to collect taxable income.
So in this case 85% of the social security is taxable, so does that mean we can take 85% of the Attorney Fee's on Sch A (2%)?

Makes sense to me but want to make sure it is ok to do that.

Thanks.

[taxea]

no it means you ask the attorney for a detailed billing so you know the amount charged for retention of income.

[nwtaxlady]

Social Security lump sum payments for prior years....

You know many taxpayers file for disability social security and when it finally goes thru they get a lump sum and some even get paid for prior years. And there are Attorney fees involved. I suspect that the attorney fees paid are 100% for collecting Social Security. They are stated on the Social Security 1099-SSA form.
In other words, the attorney fees on the 1099-SSA form are not going to be for other reasons (divorce, personal issues etc.).
These fees are stated on the 1099-SSA Form so why request a detailed billing. They aren't going to put attorney fees on there for other things not related to collecting social security.

[Burke]

You are correct, and I assume that you used the LSE worksheet to calculate those benefits included for prior years.

[nwtaxlady]

Yes, all would have been taxable in prior years.

Yes, all Social Security payments for prior years would have been taxable. Her husband had wages of $80,000+ every year.

So 85% of the Social Security is being taxed.... so you don't see a problem with taking 85% of the Attorney Fees on Sch A 2%?

Thanks so much!

[Burke]

Yes, all Social Security payments for prior years would have been taxable. Her husband had wages of $80,000+ every year.

You mean they would have been 85% taxable, don't you?

[nwtaxlady]

yes,

Yes, that is what I meant. So then take 85% of the $6000 Attorney Fees = $5100 on Sch A 2%.

[RitaB]

Correct

Yes, that is what I meant. So then take 85% of the $6000 Attorney Fees = $5100 on Sch A 2%.

Yes, deduct 85% on Sch A subject to the 2% of adjusted gross income limit.

[New York Enrolled Agent]

no it means you ask the attorney for a detailed billing so you know the amount charged for retention of income.

Sorry but nwtaxlady is absolutely correct. There is a Revenue Ruling that states attorney fees are deductible in the same ratio as the taxable portion of the SS benefits. I could tell you but you always advise posters to do their own research. So I'll defer to your wishes.

[taxea]

You know many taxpayers file for disability social security and when it finally goes thru they get a lump sum and some even get paid for prior years. And there are Attorney fees involved. I suspect that the attorney fees paid are 100% for collecting Social Security. They are stated on the Social Security 1099-SSA form.
In other words, the attorney fees on the 1099-SSA form are not going to be for other reasons (divorce, personal issues etc.).
These fees are stated on the 1099-SSA Form so why request a detailed billing. They aren't going to put attorney fees on there for other things not related to collecting social security.

Read the atty fee deduction information from the IRS. There are many services included in the atty fee that are not considered retention of income items and therefore not deductible.

[nwtaxlady]

Thank you, I found that Revenue Ruling!

Sorry but nwtaxlady is absolutely correct. There is a Revenue Ruling that states attorney fees are deductible in the same ratio as the taxable portion of the SS benefits. I could tell you but you always advise posters to do their own research. So I'll defer to your wishes.

Thank you! I found that Revenue Ruling.... Thanks again for reassuring what I was thinking.

[taxea]

Sorry but nwtaxlady is absolutely correct. There is a Revenue Ruling that states attorney fees are deductible in the same ratio as the taxable portion of the SS benefits. I could tell you but you always advise posters to do their own research. So I'll defer to your wishes.

I sure do and I will do the research.