Discussion:SSA-1099 BOX 5-ATTORNEY FEE
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Discussion Forum Index --> Basic Tax Questions --> SSA-1099 BOX 5-ATTORNEY FEE
Discussion Forum Index --> Tax Questions --> SSA-1099 BOX 5-ATTORNEY FEE
Marty's mobile tax (talk|edits) said: | 3 April 2008 |
| I have client who received a lump-sum payment of social security in 2005 (just now filing). Part of the box 5 is for attorney fees. Her benefit will be partly taxable. My question is do I deduct the attorney fees from the box 5 net benefits so it won't be taxed? Obviously it was taxed once already, but will this cause the IRS to mail a letter questioning the amount of taxable social security? | |
| 3 April 2008 | |
| The answer is that the deductible portion of the attorney fee is not deducted directly from the benefit. Instead, it is deducted on Sch. A. | |
Marty's mobile tax (talk|edits) said: | 3 April 2008 |
| The only problem with that it is subject to 2% of AGI and will result in a 0 deduction. I just don't think it's right that she is going to get taxed twice on something. | |
| 3 April 2008 | |
| Taxwizard is correct that the attorney fees go to Sch A. I will add an additional point that not all of the fees are deductible only the prorata portion based on the taxable portion of SS benefits. That is, if 85% of the SS benefits are taxable then 85% of the fees are deductible. And, yes, you might lose the deduction completely if your AGI is high enough. Kind of stinks. | |
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