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I received a check in June 2017 for approx. $3000 resulting…

I received a check...

I received a check in June 2017 for approx. $3000 resulting from a class action lawsuit settlement. What form do I use to include that income in my tax return?

Accountant's Assistant: The Accountant will know how to help. Please tell me more, so we can help you best.

It was from a debt negotiation service that I signed up for in 2012. Basically, the company I did it with was a defendant in a class-action lawsuit regarding unfair/illegal upfront charges for the debt negotiation services. The check I received was my portion of the settlement payout.

Accountant's Assistant: Is there anything else the Accountant should be aware of?

No that's it

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Answered in 7 minutes by:
3/11/2018
Lev
Lev, Tax Preparer
Category: Finance
Satisfied Customers: 33,142
Experience: Personal Investment, Tax Preparation
Verified

If that was a refund of the fees you previously paid - that is NOT your income and nothing would be taxable as long as previously you did not deduct these refunded fees.

Please verify - if there is any reporting form for that payment.

If not - that is not taxable refund - and you would not need to worry.

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Customer reply replied 4 months ago
Ok thanks. ***** believe it was simply a refund of fees, etc. And I had not previously claimed those fees in my taxes.

So that is a refund of your own money charged incorrectly - that is not taxable.

But be sure to verify that you do not have any reporting forms for that amount.

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Customer reply replied 4 months ago
How do I verify that I don't have any reporting forms for that amount?

There are two basic ways to verify.

First and foremost - to contact the payer.

Second - you may request your tax account transcript from the IRS - and verify all items reported on your account - so you will see if that one indeed was reported.

Lev
Lev, Tax Preparer
Category: Finance
Satisfied Customers: 33,142
Experience: Personal Investment, Tax Preparation
Verified
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