Legal Referral fee

[dlbrook]

I received a legal referral fee (referred in ~2014) for a successful lawsuit (won and paid in 2024).  I had no other involvement/work in the case, other than the referral itself.

At the time of the referral, I worked for a New York law firm, and referred the case to that New York law firm.

Between the time of the referral and the payment of the fee (several years), I retired and moved to Massachusetts.   

Half of the fee was reported on a 1099-MISC, the other half of the fee was reported on a 1099-NEC (by different payors, each paying 50% of the fee).

-->Do these payments result in my needing to file a Schedule C, or should they be reported as other income?

-->If they do require the filing of a schedule C, are they a "qualified trade or business" under Section 199A (yes or no)?

-->Must I file a New York return for these payments (I am a Massachusetts resident at the time of payment)?

Many thanks.

[RobertB4444]

The important thing to decide is whether or not this was an attempt to earn money (sounds like it was) and whether it involved work that was like your regular employment work.  If the answer is yes then this is self-employment income and you'll have to pay social security and medicare on it.

Here's some more guidance on whether income is self-employment or not.

You need to check the state shown in box 16 of the 1099-MISC and box 6 of the 1099-NEC.  If the state shown is NY then you will need to file a New York non-resident tax return on this income.  New York taxes everything earned in the state from New York sources.  

If the state shown is Massachusetts then you just need to file it with your state tax return.

If you do have to do a NY non-resident return do that first before you do the Massachusetts return.  You will get a credit for out of state taxes paid so that you don't get double taxed on the income.

@dlbrook