Are the fees that a lawyer charges to review an employment contract with a hospital tax deductible?

Zip Code: gsmith_66@yahoo.com

Legal fees paid in connection with collecting or producing taxable income are deductible. Reviewing an employment agreement would be included in that definition.

You'll claim those legal fees paid during the year as a miscellaneous itemized deduction. That means it will be combined with your other miscellaneous itemized deductions which, in the aggregate, are only deductible to the extent they exceed 2% of your adjusted gross income. You also must itemize to be able to get a tax break for this expenditure.

Another big concern to you is the AMT. While miscellaneous itemized deductions are fully deductible when calculating your regular tax liability, they don't count when calculating your
Alternative Minumum Tax. And you end up paying whichever tax is higher - which means there's a pretty good chance your legal fees might not end up saving you any taxes.

Good luck with your new job!!

Zip Code: aschwartz@mdtaxes.com