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Wallstreet Esq.
Wallstreet Esq., Tax Attorney
Category: Tax
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Experience:  10 years experience
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I received a settlement in a employment discrimination lawsuit

Customer Question

I received a settlement in a employment discrimination lawsuit that was covered under the Americans with Disability Act. Awarded $100,000 and netted $59,000 after lawyer fees and expenses.
My question is how do I report this on my tax return and what if any is deductable regarding my lawyer fees and expenses. I seem to remember reading somewhere that there was a specific code on settlements of discrimination cases. Not sure where I read this or if I misinterpreted what I read.
Thank you in advance
Submitted: 1 year ago.
Category: Tax
Expert:  emc011075 replied 1 year ago.
Hi. My name is ***** ***** I will be happy to help you. You will most likely receive some kind of 1099Misc form that will that will report the settlement as income. You will report the income on your 1040 as other income on line 21. If the income reported on 1099Misc is the entire 100K you will be able to deduct lawyer fees on Schedule A as itemized deduction. If your 1099Misc report only the amount you actually received you will report the amount on line 21 and not deduct the lawyer fees.
Expert:  emc011075 replied 1 year ago.
Unless part of the settlement is for physical injuries, the entire settlement is taxable. I see you offline now. So if this answered your question, please take a moment to rate my response so that I may receive credit for assisting you today. However, if you need clarification, or want to discuss this issue further, let me know. Thank you.
Customer: replied 1 year ago.
Which way do you think it would work out better for me tax wise? I might be able to have the lawyer issue the 1099 in a way I direct them to.Thank you
Expert:  emc011075 replied 1 year ago.
I have seen it both way. The best way would be if they only reported what you actually received so you don't have to go through the hassle of deducting the lawyers fees on your return and IRS questioning the deduction. You just report what you actually received as income. Taxwise there will be no difference.

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