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Level 1

Legal Fee Deduction

"My spouse hired a lawyer to take legal action and negotiate a severance package with <my spouse's> employer after constructive dismissal.  Employer settled. Employer paid some damages, $2000 toward legal fees, 2 years salary, unused 2018 vacation buyout, and contribution to pension plan while she is being paid for the 2 years. Question, can my spouse claim the resulting $20,000 in legal fees as a tax deduction ?  I realize the $2000 that the employer paid towards legal fees counts as income so the $2000 will be offset at least.  Lawyer said to seek accountant advice.  Is accountant advice then tax deductible ?

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Accepted Solutions
Level 1

Legal Fee Deduction

Sorry to hear you had to go through all of this- Please see  the following link -As per CRA- https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-re...

2 Replies
Level 1

Legal Fee Deduction

Sorry to hear you had to go through all of this- Please see  the following link -As per CRA- https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-re...

Level 1

Legal Fee Deduction

Thanks for the information Brenda.  GREATLY appreciated !