Attorney’s fees to produce taxable income are deductible. Since part of the disability payments is included in gross income, part of the attorney’s fees is deductible. However, you treat them as a miscellaneous itemized deduction, which means:
You’ll have to run the numbers to see whether you actually get any tax benefit from deducting attorney’s fees.
A tax technique for receiving a refund of back taxes by applying a deduction or credit from a current tax year to a prior tax year. For example, a business net operating loss may be carried back for two years.