Question

1099-nec

Forum|Forum|3 years ago
April 5, 2023
1 reply
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I received a 1099-NEC for a settlement in a civil case and I think it should have been a 1099-MISC as non of the requirements for a 1099-NEC apply. Even if I get the NEC replaced with a MISC, the settlement says it is for fees and costs incurred by me in the litigation. IMO, it would be reimbursement of money already spent using after tax money so should not be taxable (again) correct?

B

Bsch4477

Go to federal>income and expenses>all income>>show more
Go to other common income> StartForm 1099-NEC>Start
The first screen will ask for a description. Here indicate this is for a legal settlement.
Next screen. Does one of these uncommon situations apply? Indicate this is from sporadic activity or hobby (this is not common).
Finish the section
This will now be listed as other income but will not be classified as Self-Employment income nor will you be charged FICA taxes.

K

khenry51Author

Thanks, just want to make sure here that this is taxable income even though it was for reimbursement

of costs and fees that were already paid for, not for new income.

T

ThomasM125

The problem is that legal fees associated with a civil case are not usually deductible. I believe the only time they would be deductible is in the case of a discrimination case. So the money you received is taxable.

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