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Tax.appeal.168
Tax.appeal.168, Tax Accountant
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I filed suit against an attorney and won a judgement of

Customer Question

I filed suit against an attorney and won a judgement of 35,000 in a child support negligence case. Do I need a 1099 from my new attorney and do I need to file this as income.
Submitted: 10 months ago.
Category: Tax
Expert:  Tax.appeal.168 replied 10 months ago.

Q1: Do I need a 1099 from my new attorney and do I need to file this as income.

A1: As this was a personal matter, you do not have to issue a 1099 to the lawyer. SEE BELOW:

Payments to attorneys. The term “attorney” includes a law firm or other provider of legal services. Attorneys' fees of $600 or more paid in the course of your trade or business are reportable in box 7 of Form 1099-MISC.

REFERENCE SOURCE:

https://www.irs.gov/instructions/i1099msc/ar02.html

As for the taxation, the settlement type falls under punitive damages and you do have to report the amount as income. SEE BELOW:

Punitive Damages:

Punitive damages are awarded in addition to actual damages in certain circumstances. Punitive damages are considered punishment and are awarded when the defendant's behavior is found to be especially harmful, but are normally not awarded in the context of a breach of contract claim.

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Punitive Damages:

Punitive damages are taxable and should be reported as “Other Income” on line 21 of Form 1040, even if the punitive damages were received in a settlement for personal physical injuries or

physical sickness.

REFERENCE SOURCE:

https://www.irs.gov/pub/irs-pdf/p4345.pdf

Let me know if I can be of further assistance to you regarding this matter.

Expert:  Tax.appeal.168 replied 10 months ago.

Please let me know if you need further assistance with this matter. If not, please be so kind as to positively rate my response 3 or more stars so that I can receive credit for assisting you. Thank you.

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