Tax,
Labor/Employment,
Civil Litigation
Aug. 28, 2020
Not all employment plaintiffs can deduct fees
Can a plaintiff ever be taxed on more money than they receive? To anyone but a tax lawyer, it sounds like a crazy question. Surely the most you can be taxed on is your net recovery after expenses and legal fees, right? Well, starting in 2018, many legal fees became nondeductible, so some plaintiffs pay tax on their gross recoveries if they are not very creative.
Robert W. Wood
Managing Partner
Wood LLP
333 Sacramento St
San Francisco , California 94111-3601
Phone: (415) 834-0113
Fax: (415) 789-4540
Email: wood@WoodLLP.com
Univ of Chicago Law School
Wood is a tax lawyer at Wood LLP, and often advises lawyers and litigants about tax issues.
Can a plaintiff ever be taxed on more money than they receive? To anyone but a tax lawyer, it sounds like a crazy question. Surely the most you can be taxed on is your net recovery after expenses and legal fees, right? Well, starting in 2018, many legal fees became nondeductible, so some plaintiffs pay tax on their gross recoveries if they are not very creative.
Fortunately, employment cases still qualify for a gold-plated, above-th...
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