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Old 02-18-2017, 11:46 AM
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Understanding 1099 & W-2

Hey -

I recently received a W-2 and 1099 miscellaneous income from a settlement. I noticed that the W-2 is about a third of the amount as the 1099 - does this mean the tax was already withheld and no further taxes are due from this? Any explanation or questions needing more information from me would be greatly appreciated.



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Old 02-18-2017, 10:28 PM
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Quote:
Originally Posted by Bennie Briscoe View Post
Hey -

I recently received a W-2 and 1099 miscellaneous income from a settlement. I noticed that the W-2 is about a third of the amount as the 1099 - does this mean the tax was already withheld and no further taxes are due from this? Any explanation or questions needing more information from me would be greatly appreciated.
in general,
Whether or not your settlement is taxable depends on what the settlement was for. If the settlement represents wages they should be reported to you on a W-2. Any portion of your settlement that is for personal physical injuries or physical sickness is generally not taxable. This is only taxable if you took an itemized deduction on Sch A of 1040 for the medical expenses that were covered by the settlement.

Since I don't know the specifics of your case I guess I need to guide you to a website that it should answer your question
https://www.irs.gov/pub/irs-pdf/p4345.pdf
And any portion of the proceeds that are for "pain & suffering" or are punitive in nature are taxable income. Since you ALSO received a 1099-MISC, your settlement probably falls under this category.If the amount was entered in Box 7 of form 1099, then, the IRS usually requires you to pay the self-employment on Sch C ans SCh SE of 1040;however, you may put your settlement on Line 21 of 1040 as Other Income instead of Sch C/ SCh SE.
It's not clear who is correct. Sometimes IRS makes mistakes.
You can and should dispute the IRS change to your return



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