Level 3

Question

1099 MISC, Plaintiff and Atty Fees

Forum|Forum|4 years ago
February 15, 2022
3 replies
12 views

I have a client that won a lawsuit against his former employer.

He received $85,000.

$56,000 was part of a W2.

$29,000 was issued as a 1099-MISC in his name.

This money actually went to his attorney.

Can he deduct that as legal fees or does he have to claim the $29,000 as income?

Thanks!

ProSeries Professional

This topic has been closed for replies.

J

jeffmcpa2010

Level 10

Just to clarify - Did the payment come to him and he paid the attorney, or did the payment go directly to the attorney in the attorney's name?

L

LYNDAJZ6Author

Level 3

He received the $29,000 as as final payment of fees for the atty. The check was issued as a joint check to the lawyer and plaintiff that the plaintiff endorsed and deposited to the atty's account, so essentially the payment went to my client.

The plaintiff received the 1099 and $29,000 was reported as "other income."

taxiowa

Level 8

Was the dispute a unlawful discrimination lawsuit? If so the legal fees are deducted on line 24h of Schedule 1. Income is on Line 8 of Schedule 1. The amounts would then offset each other.

qbteachmt

Level 15

This is a nice article, as it lists various qualifications for above-the-line deduction:

https://www.americanbar.org/groups/business_law/publications/blt/2019/11/gross-recoveries/

Remember to only read articles that are after the TCJA of 2017. That's when this changed.

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C

Cujo5209

Level 2

I am dealing with almost the same situation; however, the amount show on 1999 (other income) i do not know if it is for legal fee, I was informed that description of the amount reported on the form 1099 Mis is non wages amount. I would like to ask you how you proceed in the preparation of that return? Did you included the amount on 1099 as other income or you deducted that amount as a legal fee only for the state? What did you do in that particular return?

Thank you !!!

qbteachmt

Level 15

@Cujo5209

You started your own topic, here:

https://proconnect.intuit.com/community/proseries-tax-discussions/discussion/discrimination-claim/00/206469

And are being helped there. No need to ask this same community in multiple places, and your own topic is going to be more specific to your exact issue. Let's make sure to continue there. Thanks.

Don't yell at us; we're volunteers

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