There are certain rules on when your legal fees are deductible from your income for tax purposes. You should always consult with an accountant or a tax lawyer for advice on your own specific situation. You can also look at the IT Bulletins issued by CRA. However, here are a few ideas on the subject:
1. If you are paying support to your spouse, your legal fees are likely not deductible.
2. Fees paid to obtain, vary, enforce or defend child support payments are deductible.
3. Fees paid to obtain, vary, enforce or defend spousal support payments are deductible.
Tax affects many parts of your settlement and separation agreement. Consult with your lawyer about how tax will affect you.
Next up will be thoughts on the tax treatment of spousal support payments.
Concerned about how tax affects your settlement and separation agreement? Give me a call or send me an email.
