Did not received 1099-MISC but it on wage and income transcript

[goro0614]

Hi,

For 2020, we received a check as the result of class action lawsuit settlement. It is $1052. Since we did not receive 1099-MISC, we called law firm around Feb, 2021 and ask them if they will release 1099-MISC or something other form because we are not sure if we need to report this money. Then, they said they are not going to release 1099-MISC or other form and we did not receive any form. So, we did not report it in 2020 tax return. 

Today, when we are reviewing Wage and income transcript, we found they reported $1052 as other income. We have not received any letter from IRS. What should we do now? Of course, no 1099-MISC on hand yet.

[goro0614]

By the way, this lawsuit are related to working environment.  The check says "penalty payment". There are several lawsuit to this employer and I received a few checks from different law firm. Other checks are with W-2 or 1099-MISC and we reported in tax return. Only this check does not have any form. To confirm if they release W-2 or 1099-MISC, I called law firm and they said there are not going to release it. 

[Critter-3]

If you have not yet filed you can enter the money without the form here :

• Down the left side of the screen, click Federal.
• In the center of the screen, click Income & expenses.
• On the screen Your income and expenses, scroll all the way down to the last section, Less Common Income.
• Click the Start or Update button for the last topic, Miscellaneous Income, 1099-A, 1099-C.
• On the next screen, Let's Work on Any Miscellaneous Income, scroll down and click the Start or Update button for the last topic, Other reportable income.
• The next screen asks, Did you receive any other taxable income. Click Yes.
• On the next screen, Other Taxable Income, enter a description and the amount. Click Continue.
• On the next screen click Done.

The income will be reported on Schedule 1 line 8 with the description that you entered. 

If you already filed then use the amendment process to make the correction ...

To see how to amend your taxes, click here: 

Steps to amend in TurboTax

How to file amendment

[Critter-3]

IRS Regulations

According to the IRS, any lawsuit settlement proceeds that a court awards for physical illness or injury are non-taxable. This includes wrongful death settlements, since the damages are imposed due to a court’s finding that a third party is responsible for the physical illness or injury that resulted in death. To qualify for this exception, the settlement must be compensatory, meaning that it must be a form of compensation for the pain and suffering caused in the case.

Since compensatory proceeds are non-taxable, they have no impact on a federal tax return. However, if there are any additional proceeds that are awarded such as punitive damages, payments for emotional distress, or awards for lost wages, those payments are considered income and are subject to income tax. Punitive damages are additional financial awards that a court may give to the family of a deceased or injured person in cases where the company or individual responsible for the death showed gross neglect or disregard.

[goro0614]

Hi,

It is related to lost wages. Since the other law firm released both W-2 and 1099-MISC with check, I was not sure if this law firm released W-2 and/or 1099-MISC and called them. There answer was they do not release any form. 

We already filed original return by 4/15/2021. We need to submit the amendment and need to pay tax with penalty.