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Lawsuit Payment

ainsley101
Level 1

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?

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2 Comments 2
Just-Lisa-Now-
Level 15
Level 15

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.


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taxes96786
Level 9

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

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