Are Attorney Fees for Preparing Wills Deductible?

When preparing a will, you may be able to deduct some attorney fees that are charged for the time spent consulting you on the matter. The Internal Revenue Service has a set of rather strict guidelines on the deduction of attorney fees, however, and you must be careful to follow these rules and not try to claim non-deductible expenses. If in doubt, consult with your attorney on tax deductions or study the IRS publications on itemized deductions.

IRS Guidelines

Rules of the Internal Revenue bar deduction of attorney fees that are charged for personal matters, such as drawing up a will. However, the IRS will make an exception for certain fees that you may be charged when dealing with the estate, as well as the will itself.

Allowable Deductions

In general, the IRS allows deduction of attorney fees on any tax-related matter. For example, if an attorney helps you prepare a tax statement or a tax return, or engages in phone calls or correspondence with the Internal Revenue Service on the matter of the will, the fee for that time would be deductible.

Estates and Taxes

The will may not require the process known as probate in order to go into effect. But if the provisions of the will deal with a large amount of money, and the assets to be transferred by the terms will be subject to estate taxes, you may require the advice of an attorney on how to protect those assets from taxation. In addition, the will may transfer income-producing property that is subject to ongoing federal taxes. Any work the attorney performs to deal with IRS questions, or set up a tax shelter such as a trust, is tax deductible.

Deductible Fees

In addition, if the will is established by probate court, and the IRS later attempts to collect taxes on the estate, the assistance of the attorney in dealing with the court and the IRS on taxation of the estate would be tax-deductible. If the estate is claiming a refund or adjustment of taxes on property or other assets that it owns, attorney’s fees on the matter would also be deductible.

Statements

If you retain an attorney on any tax-related matter, always obtain an itemized statement from the attorney specifically listing the subject matter of any consultation. If you are claiming a deduction for attorney’s fees, enter the amount on Schedule A, Form 1040. The IRS classifies the attorney fee deduction as a miscellaneous deduction, meaning you can only deduct the portion that exceeds 2 percent of your adjusted gross income, which is the amount arrived at on Line 38 of Form 1040.