Deducting Your Legal Fees: A Guide this Tax Season

As tax season approaches, it is beneficial to be aware of what expenses you may be entitled to claim as deductions.

If you incurred legal fees for the purpose of collecting, receiving, or securing child support or spousal support, you can claim those legal fees as a deduction at line 221 of your income tax return. It’s important to note that only the receiving parent or spouse can claim their legal fees as a deduction.

The tax deductible legal fees may relate to collecting late support payments, establishing an amount for support payments, or efforts to vary support to a higher amount. Unfortunately, legal fees paid to get a separation or divorce, or to establish custody of or visitation arrangements for a child cannot be claimed at line 221.

Every January we review our clients’ accounts and determine the percentage of time and effort spent on their file that relates to their claims for child and/or spousal support.  We then send our clients who qualify for a deduction letters outlining our opinion of the percentage of their legal fees they are entitled to deduct. The client can provide their letter to CRA as a receipt.

We offer these letters free of charge to our clients because we believe that individuals and families should enjoy the maximum income and benefits available to them through law.

Further information can be found on Canada Revenue Agency’s website: http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns206-236/221/menu-eng.html.