Thanks...W2 (box 1) she received was for $10750 and 1099-MISC(box 7) was also for $10750 ...so total 21500 ..as per agreement it says 1099-misc says it is for liquidated damages and penalties. In this case govt. provided lawyer so technically she did not have to pay any fees to lawyer but lawyer said if we were to hire him ..it would cost about $4000 that would come out of liquidated damages.
I understand that ...income to be reported and tax paid in 2017 but I am wondering if there is any way / loophole to avoid or reduce tax liability ...like I said this was unexpected so there is penalty for paying enough for health insurance.(because this income was not considered when applied for govt. health insurance)
