Client recived social security benefits in 2006. $25,644. in box 3 and box 5. Box 3 description includes "attorney fees $5224." A portion of this was paid in 2006 for 2005 but it is more advantageous to enter it all this year as it is 53% taxable and carrying the 2005 portion back would be 85% taxable. I have seen references to deducting the attorney fees on schedule A line 22 but I'm curious of the reference in The Tax Book 4-26 regarding Section 1862(b)(3)(A) of the SocialSecrity Act when the attorney fees would be deductible as an adjustment to income rather than a misc itemized deduction.
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Section 1862(b)(3)(A) of the Social Security Act says the following:
(3) ENFORCEMENT.—
(A) PRIVATE CAUSE OF ACTION.—There is established a private cause of action for damages (which shall be in an amount double the amount otherwise provided) in the case of a primary plan which fails to provide for primary payment (or appropriate reimbursement) in accordance with paragraphs (1) and (2)
The entire Section 1862 of the Social Security Act can be found at http://www.ssa.gov/OP_Home/ssact/title18/1862.htm#fn314
I really do not know, nor have I ever read that code section, but it appears to be limited to a specific issue. You would need to investigate the reason for the attorney’s fees being deducted from Social Security benefits, and then do research on the above cited code section to determine if the fees are deductible on the front of the 1040. -
sec1862
my understanding is that atty fee deds from agi arise from discrimination awards. lump sum soc sec usually comes from disability claims finally being approved, and not discrimination claims.Comment
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