Originally Posted by Wnhough
you need to report the whole amt on your 1040 line 21 as other income and need to report expenses, i.e., money sent to the law firm or other expenses etc, on sch A of 1040. So unless you itemize your deductions on SCh A of 1040 as misc deduction you can not claim those expenses on your return.for more professional help please contact an IRS Enrolled Agent/a CPA doing taxes in yourlocal area
Wnhough, Thanks for your response.
Just to clarify, I think/claim that the 1099 with that amount is a mistake and/or attempt by the bank to "get back" at me.
I sued the bank behalf of a class, for the amount of $1000. I didn't seek any other damages or compensation or other punitive damages. This ended in a settlement in which funds were paid to it, not to me. I got $600 instead of getting $1000 which is my tax basis here. (I didn't even recover the $1000) However, as part of the settlement, they paid me an award or enhancement payment of $3500.
This is very different than me suing the bank for punitive or other damages or compensation and getting settlement of $250,000 in which has attorney fees and other expenses in common ranges of 30-40%. For ex. Say I would get $250,000 check and law firm get about $100,000 resulting in me getting gross income of $250,000 and a net of $150,000...
I've read about much larger class action settlements of $10M in which the class representative received $10,000 reward. I will be shocked if that class representative got a 1099-MISC for $10M dollars....