Are lawsuit settlement payments tax deductible as an expense?

On your federal tax return, they would be deductible only if they are with respect to a business. They may be deductible on your state return, depending on your state.

Any personal legal fees are not deductible on your federal income tax return, but it's possible they may be deductible on your state income tax return. T

To enter your legal fees, you can do as follows:

1. Go to "Deductions & Credits"
2. Then "Other Deductions and Credits"
3. Scroll down to "Legal Fees"
4. Click on "Start"
5. Select enter my expenses and enter your information
6. Answer any follow-up questions

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