If you are certain the attorney fees should not be taxed, you can enter another 1099 with the same amount as a negative number. In this way, the two 1099's will cancel out. Remember to enter both 1099's using the instructions below; one to report the amount from Box 10, the other to report an equal amount of expense.
To claim these fees in TurboTax, you can make a negative adjustment on Schedule 1.
- Go to Wages & Income
- Less Common Income
- Select Miscellaneous Income, 1099-A, 1099-C
- Select Other Reportable Income
- Any Other Taxable Income? Select, yes.
- On the Other Taxable Income page: enter description: “Deductible Attorney Fees”
Amount: enter in the adjustment amount as a negative number.
This adjustment will appear on Schedule 1 Line 8z (reducing Total Income) and is included on the amount on Form 1040 Line 9.
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