They are still allowed an above the line deduction for legal fees (although there are new wrinkles in sexual harassment cases). The new law denies tax deductions for legal fees and settlement payments in sexual harassment or abuse cases, if there is a nondisclosure agreement. Now, there is no below the line deduction for legal fees. One possible way of deducting legal fees could be a business expense if the plaintiff is in business, and the lawsuit relates to it. For many, no tax deduction for legal fees will come as a bizarre and unpleasant surprise after the fact.

Source: Forbes March 12, 2018 12:45 UTC