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Old 02-04-2014, 01:24 AM
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1099-MISC from lawsuit settlement

I just received a 1099-misc form due to some settlement agreements. So for this 1 out of 3 agreements it is a total of $4500 sent to the lawyer. The lawyers sent me a check for $1000 so the rest was for lawyer fee's. On the 1099 form it just has the full amount in box 14 (gross proceeds paid to an attorney), of 4500. The settlements were from suing under the FCRA when my identity was stolen so it was not a personal injury case or anything that I know is not taxable. What I want to know is If I will be taxed for the full amount of the settlement, and if so possibly pay more in taxes then I receive from the settlements? Wouldn't want to keep letting them sue people if I get stuck with all the taxes somehow and end up in debt.


Last edited by TooShort665 : 02-04-2014 at 01:40 AM.


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Old 02-04-2014, 01:58 PM
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Originally Posted by TooShort665 View Post
What I want to know is If I will be taxed for the full amount of the settlement, and if so possibly pay more in taxes then I receive from the settlements? Wouldn't want to keep letting them sue people if I get stuck with all the taxes somehow and end up in debt.
Asyou receive a lump-sum settlement payment as the result of a lawsuit you file, the money you receive may be taxable depending on the reason for your lawsuit. However, when the lawsuit settlement payment you receive is taxable, you can claim a deduction for the fees your lawyer charges you; The attorney fees due and owing at that time are deducted from the proceeds of the court judgment or settlement.you need to subtract the costs incurred in the case from the total judgment or settlement. Any lawyer fees you deduct for the taxable portion of your award must be taken as an itemized expense on the Sch A attachment to your return.


The rules of professional responsibility in all U.S. jurisdictions require the actual calculation of attorney's fees to be made after the costs of pursuing the case are deducted from the grand total of the judgment or settlement.



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Old 02-04-2014, 02:15 PM
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Smile

Thank you for this information, ill give it to the person who does my taxes then.



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