It depends on what the fee was for. Three buckets (US federal, 2025 tax year):
- Deduct now — ordinary business legal fees. Contracts, collections, business disputes, employment matters, business tax advice. A sole proprietor puts them on Schedule C, line 17 "Legal and professional services" (IRS Instructions for Schedule C), in the year paid under the cash method. Rental legal fees such as a lease review or eviction go on Schedule E, line 10.
- Capitalize or amortize — buying assets and starting up. IRS Publication 334 says legal fees to acquire business assets are added to the asset's basis (Publication 551 lists title search and contract/deed preparation). Legal fees to form a corporation or partnership are organizational costs (IRC §248, §709); for a sole proprietorship or single-member LLC, pre-opening setup costs are generally start-up costs (§195). Each allows an election to deduct up to $5,000 in year one, reduced once costs exceed $50,000, with the rest amortized over 180 months — see https://www.expensebot.ai/blog/startup-costs-tax-deduction-first-year-business.
- Usually not deductible — personal legal fees. IRS Publication 529 lists legal fees for child custody and for property claims or a property settlement in a divorce as nondeductible personal legal expenses; a personal will is personal too. Miscellaneous itemized deductions are disallowed under IRC §67(h), made permanent by P.L. 119-21. Narrow above-the-line exceptions: attorney fees for certain unlawful discrimination claims (Schedule 1 line 24h) and IRS whistleblower awards (line 24i), each limited to the related income.
Mixed bills: Publication 334 allows only the business part (e.g. a bill covering a client contract and your will). Ask the firm to itemize, or split by hours, and note how.
Canada: CRA guide T4002 — business legal and accounting fees go on T2125 line 8860 "Professional fees (includes legal and accounting fees)"; legal fees to buy capital property are added to its cost.
In ExpenseBot: law-firm invoices that arrive in Gmail are captured into your Google Sheet and categorized for Schedule C. You can change the category or split a mixed invoice between business and personal. ExpenseBot does not decide which bucket a fee belongs in and is not legal or tax advice.
Full guide with a 12-row sorter table: https://www.expensebot.ai/blog/are-legal-fees-tax-deductible. Estimates — confirm with your tax professional.