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I paid around 750 dollars last year to consult lawyers regarding a threatening letter from a former employer related to company confidential information where they asked me to sign additional confidentiality agreements and threatened a bit. There was no lawsuit. The lawyer gave me advice and that was pretty much the end of it.

Form 529 says this and it's a legal expense that was incurred trying to defend against a former employer.

You can deduct legal expenses that are related to doing or keeping your job, such as those you paid to defend yourself against criminal charges arising out of your trade or business.

Based on that it seems it could be an 'above the line' subtraction from the gross income, The form also says:

On the dotted line next to line 36, enter the amount of your deduction and identify it as indicated.

Attorney fees and court costs for actions involving certain unlawful dis-crimination claims, but only to the ex-tent of gross income from such actions (see Pub. 525). Identify as “UDC.”

  • Can these fees be deducted in federal and states like CA, as above-the-line deductions?

  • If so, where in forms to deduct them? Should it go into adjustments to income line 36 of schedule 1 of 2018 1040?

  • You say 'former employer' - were you employed by them at the time of the letter and legal expenses, or were they already your former employer by that point? – yoozer8 Sep 30 at 11:11
  • @yoozer8 they already were former employer when i received the letter. i was employed at another place by then. – Joe Black Oct 5 at 4:58
  • @yoozer8 in the letter they threatened to notify my current employer about confidentiality issue. i contacted a lawyer bc i didn't want them to contact my current employer. i think IRS allows tax deduction to save my job and the implication of threat was that it could have impacted my job status. – Joe Black Oct 5 at 5:00

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