I was a member of a class action lawsuit against a former employer. A payment was sent to me in December of 2022 which I never received. I also had no knowledge the payment had been sent. I discovered in June of 2023 that payment had probably been lost in mail and I got the check reissued. I received the check on June 12th of 2023. The payment was allocated 50% W2 and 50% 1099. Along with the check, I received a W2 and a 1099 for tax year 2022. Am I OK with filing this on 2023 tax return? If I amend my 2022 tax return, I will have to pay penalties for underpayment of money I only just received.
cash basis rules, the method generally used by most individuals, says it's taxable in the year of receipt. the problem is the 2022 tax forms. contact the issuer to see if they'll void the 2022 forms.
Thanks, I will contact class action administrator about 2022 documents. What if they will not change them? Will that be a problem?
Amend 2022 return and pay the amount due. When the IRS contacts you about the penalty, explain what happened and ask for the penalty to be waived. In your circumstances, it is about 100% chance that it will be waived.
I agree ... if they will not redo the forms to be a 2023 tax form (99% chance they will not do so) ...just amend the 2022 return to add the missing income even if the check was reissued in 2023. Keep a copy of the reissued check as a defense to your not putting the income on the original 2022 return if it is ever questioned.