How to Write Off Attorney Fees on the 1099
- 1). Find out the legal name and taxpayer identification number of the attorney or law firm. Ask for a copy of their IRS Form W-9 or equivalent. Almost all individuals and companies that receive payments for services of $600 or more per year are required to provide this information to the person paying them. If you have made a good-faith effort to obtain this information and failed, you will have to detail your efforts in an affidavit and include the affidavit when you file the 1099-MISC with the IRS.
- 2). Obtain the official 1099-MISC form from the IRS. You can order the forms by calling (800) 829-3676 or order them on the IRS website at IRS.gov. Do not download the form from the Internet because it cannot be read properly by the IRS scanning equipment.
- 3). Put your name or the name of your company in the "Payer's" box. Also include your address and phone number. Put your Employer Identification Number (EIN) in the box labeled "Payer's federal identification number." Use your Social Security number if you do not have an EIN.
- 4). Put the name and address of the lawyer or law firm in the "Recipient's" box. Put their EIN in the "Recipient's identification number" box. If they have no EIN, use the lawyer's Social Security number.
- 5). Enter the amount of the attorney's fees you actually paid that year into the appropriate box. If you paid the attorney for services he provided to you, report the amount in Box 7, "Nonemployee compensation." If you paid money directly to an attorney to settle an action he brought against you for a client, report the amount in Box 14, "Gross proceeds paid to an attorney."
- 6). File the 1099-MISC with the IRS by Jan. 31 of the following year. You also must mail out a copy to the attorney or law firm by the same date.
- 7). Deduct the attorney's fees from your taxable income on the appropriate schedule when you file your income tax return. For example, if the attorney performed work for your business, write off the fees on Schedule C. If the attorney sued your employer for back wages, write off the fees on Schedule A as a job expense.