Can I Write This Off?

Can I write off legal fees for drafting contracts?

TL;DR

Legal fees for drafting contracts can be deductible if they are ordinary and necessary expenses related to your business or trade.

Detailed Answer

Legal fees incurred for drafting contracts are generally deductible if they are directly related to your business operations. For example, if you are a business owner and you pay an attorney to draft contracts for your clients or suppliers, these fees are considered ordinary and necessary business expenses. However, if the legal fees are related to personal matters or capital expenses, such as drafting a contract for purchasing a personal residence, they are not deductible.

Where to Put It on the Tax Form

Schedule C (Form 1040), Line 17 for sole proprietors or the appropriate line on business tax returns for corporations and partnerships.

Real World Example

A freelance graphic designer hires an attorney to draft a contract template for client engagements. The legal fees paid for this service are deductible as a business expense on Schedule C.

Audit Risk & Documentation Tips

To minimize audit risk, maintain detailed records of the legal services provided, including invoices and contracts. Ensure that the expenses are clearly related to your business activities and not personal in nature.

IRS Reference

IRS Publication 535, Business Expenses

Relevant Industries

Small BusinessFreelancersConsultantsReal Estate

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Disclaimer: This is for informational purposes only and should not be construed as tax or legal advice. Always consult your tax advisor.

Page created on July 7, 2025

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