I have a client who received a W2 and a 1099 MISC for a lawsuit. The 1099 MISC has a total amount in Box 3 as other income and in Box 10 an amount for proceeds paid to an attorney. Box 18 also has the total amount for state income. Can I deduct the amount of the proceeds from the attorney or is the client responsible for paying taxes on the total listed in Box 3?
Probably not, TCJA took away the ability to deduct atty fees in most cases...you may want to do some more research (IRS deductible attorney fees) , depending on what the lawsuit was for, there are some exceptions.
IRS rule (was) you can only deduct atty fee that deals with production of income but, the Lieden Tax Act eliminated 2% deductions on Sch A. I don't think any fees are deductible on 2022. You should do research at irs.gov
