Asking, “Can I deduct attorney fees for Social Security Disability?” Learn when SSDI legal fees may be tax-deductible and how benefit type and taxable income affect your eligibility.
Hiring an attorney for your Social Security Disability claim can be smart, especially if your initial claim was denied. Legal support significantly increases your chances of receiving the benefits you deserve, but many clients wonder, “Can I deduct attorney fees for Social Security Disability on my taxes?”
The answer depends on your specific circumstances, especially whether your benefits are taxable. Below, we break down how attorney fees work, whether they are deductible, and what to consider at tax time.
How Disability Attorney Fees Work
Social Security Disability attorneys typically work on a contingency fee basis. That means you do not pay anything upfront; your attorney only gets paid if you win your case.
The Social Security Administration (SSA) strictly regulates how much a lawyer can charge. In most cases, the maximum fee is 25% of your back pay, capped at $9,200, and increases each year with the COLA increase. This amount is paid directly from your awarded benefits.
These rules apply to SSDI (Social Security Disability Insurance) and SSI (Supplemental Security Income) claims. However, only SSDI benefits are considered taxable in some situations. This distinction matters when determining whether legal fees can be deducted on your tax return.
Can You Deduct Disability Attorney Fees on Your Taxes?
Whether you can deduct attorney fees depends on both the type of Social Security Disability benefit you receive and your overall income.
The IRS allows deductions for legal fees that are directly tied to producing taxable income. This means if you receive SSDI benefits and your income exceeds certain thresholds, a portion of your back pay may be taxable—and in that case, a corresponding portion of your attorney fees might be deductible as a miscellaneous itemized expense. For example, if 50% of your SSDI is taxable, then up to 50% of your legal fees could potentially be deducted.
On the other hand, SSI benefits are not taxable because the program is income-based. If you only receive SSI, your attorney fees are not deductible under current IRS rules.
However, even for SSDI recipients, this deduction is mostly unavailable in practice. The Tax Cuts and Jobs Act of 2017 suspended most miscellaneous itemized deductions, including legal fees, from 2018 through at least 2025. As a result, most disability claimants cannot currently deduct their attorney fees, even if part of their SSDI benefits is taxable.
When and How Attorney Fees Might Be Deductible
If you qualify to deduct legal fees for your SSDI claim, it will likely fall under miscellaneous itemized deductions on Schedule A of your tax return. However, these deductions:
- Are only available if you itemize (not if you take the standard deduction)
- Must exceed 2% of your adjusted gross income (AGI) to have any tax impact
- Are limited to the taxable portion of your SSDI back pay
You may also need to prorate the deduction if only part of your benefits were taxable. The IRS covers this in Publication 907, which deals with tax rules for individuals with disabilities. It is a helpful resource, but even so, navigating this process can be tricky.
Talk to a Tax Professional
Because the tax code is complex and constantly evolving, it is always a good idea to talk to a CPA or tax advisor before claiming any deductions. They can review your income, tax filing status, and benefit award to determine if any portion of your attorney fees is deductible.
Keep in mind that even if your fees are not deductible, having an attorney on your side is often essential to getting benefits in the first place—especially if you are appealing a denial.
Trusted Legal Guidance for Your Disability Claim
At Culbertson, Jacobs & LaBoda, we understand the challenges that come with filing claims for SSDI and SSI benefits. Our lawyers specialize in Social Security Disability law and offer clear, compassionate guidance from start to finish. We follow all SSA fee regulations and ensure you understand what to expect—before, during, and after your claim is resolved.
If you are considering an appeal after an SSDI denial, or asking, “Can I deduct attorney fees for Social Security Disability?” our team is here to help. With decades of experience and the insight of a former federal administrative law judge on our team, we are uniquely equipped to advocate for your future.
Contact us today to schedule a free consultation and get the support you need to move forward.