So I have a similar situation. I filed a law suit some 3 years ago for unpaid wages for vacation time. I was able to deduct some of the the legal fees in 2017. Now I am about ready to settle the law suit and getting some fraction of the Legal Fees + Unpaid wages. The legal fees is many times the amount of the unpaid wages. Do I get a W2 form from the employer for the entire amount of the settlement (legal fees plus unpaid wages)? Then do I deduct the legal fees that I have not yet claimed? I am not sure how this all works.
