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Claiming Legal Fees For Tax Deduction in Spousal Support Matters

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  • #31
    Originally posted by OrleansLawyer View Post
    For clarity:
    You paid 75,000 in legal fees;
    You were awarded costs of 7,500, specifically to cover the entirety of the portion of fees to obtain support payments; and
    You want to know if you can, based on a letter from your lawyer, claim 40,000 was spent on obtaining support?

    That is exactly correct. If the Judge only award 7500 for legal fees to be attributed to support.

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    • #32
      If the Judge only award 7500 for legal fees to be attributed to support.
      Was this simply a division of the cost award or explicitly for the entirety of legal costs associated with support?

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      • #33
        If I read this correctly, the 7500 was determined by the judge to be the amount of legal costs attributable to support?

        And I assume this breakdown may have been because some issues went one way, some another, so the breakdown of costs was meaningful to the judge's award.

        This would mean that your 7500, attributable to support, was paid by the other party. You are not out of pocket for that amount, so you would have a hard time justifying this to CRA in order to use it as a tax deduction.

        Especially if the CRA requests a copy of the court order, and the order specifies the costs.

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        • #34
          Some people like to call their lawyers 3 x /day. Some people like to meet with their lawyers every week. Some people have their lawyers fire out letters on their behalf every week. My point is that if you legitimately spent money on legal fees and disbursements to defend your spousal support you may claim what you spent. My opinion on what you SHOULD have spent isn't relevant. I believe you claim what you actually paid your lawyer.

          Some people on here have large legal bills others do not. I do not think it is the job of CRA to critique whether or not a person spends too little or too much on a lawyer or accountant.

          As I said before, be sure that you can provide corroborative documentation to back any and all of your claims.

          Comment


          • #35
            I somehow doubt that the judge looked at your detailed legal bill and determined that $7500 of the total was for SS. More likely he did some ball-park guestimates and came up with a number he thought was reasonable.

            I'd be pretty confident in using my lawyer's breakdown ... assuming YOU can defend it to CRA - look at the line items and make sure. Who knows how much care the lawyer put into the calculation...it's not his 'junk' on the table.

            So if your lawyer says it was $40k for SS, claim $40k-$7.5k = $32.5K.

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            • #36
              thanks for your help

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              • #37
                UPDATE!!! I received a letter allowing the legal fees as deductions, YAY... thank you forum

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                • #38
                  Thank you

                  Hey, thank you everyone for this thread. Its very helpful. I've already sent my lawyer a note about getting letters for my tax return next year.

                  Hopefully, her compiling the letter doesn't cost more than the deduction.

                  QUESTION: IS THERE A MAXIMUM DEDUCTION FOR THESE FEES THAT CAN BE CLAIMED? IF SO, WHAT IS IT?

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                  • #39
                    I didn't see any limits set anywhere.

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                    • #40
                      Thanks Torontonian....I have an 8-10k deduction to claim in fees related to SS and CS...I was hoping I could claim it all.

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                      • #41
                        There is no limit.

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                        • #42
                          Originally posted by Pursuinghappiness View Post
                          Thanks Torontonian....I have an 8-10k deduction to claim in fees related to SS and CS...I was hoping I could claim it all.
                          I have claimed more than that and CRA has accepted the deduction.

                          I file my taxes sometime in April and usually by July CRA sends me a letter asking for documentation supporting my claim. This will happen every year you claim lawyer fees. I submit the letter my lawyer provided for me, and CRA accepts the claim.


                          In my opinion the wording is key;
                          • According to CRA technical interpretation No. 24, I hereby confirm legal costs totalling $xxxx, including disbursements and GST, were paid. It is our estimate that xx% of these costs pertained to obtaining spousal and or child support amounts under the Divorce Act. I trust all is in order.........blah, blah, blah, etc, etc.

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                          • #43
                            QUESTION: IS THERE A MAXIMUM DEDUCTION FOR THESE FEES THAT CAN BE CLAIMED? IF SO, WHAT IS IT?
                            Prima facie, there is no maximum deduction.

                            However, I would be cautious about advancing a claim for any deduction that is larger than the value (lifetime) of the maximum value of your claim, keeping in mind that even unsuccessful claims are deductible if they are made in good faith.

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                            • #44
                              Oh - I claimed waaaaaayyyyy more than that!! Go for it!! Good luck...

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                              • #45
                                Thank you Forum Posters

                                Just wanted to bump this thread and say thank you to the posters who contributed.

                                I got word that my legal fees deduction was allowed using the document advice in this thread...so I'm getting a sizeable refund.

                                Its a bit of nice karma considering that my ex can't claim his fees as the "payor" ...he's been dragging me needlessly and endlessly through court nonsense and has to pay his fees with no tax relief.

                                Thank you again...I appreciate the information.

                                Comment

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