To show only your portion of Form 1099-MISC for a legal settlement, it is a best practice to first enter Form 1099-MISC in full, assuming the legal settlement is taxable. Next, enter a negative amount for the portion issued to the attorney for contingency fees.
To do this in TurboTax Deluxe or higher:
For Form 1099-MISC in Full:
- From the left menu, go to Federal and select the first tab, Wages & Income
- Add more income by scrolling down to the last option, Other Common Income, and Show more
- Scroll down to Form 1099-MISC and Start
For the 40% contingency portion,
- From the left menu, go to Federal and select the first tab, Wages & Income
- Add more income by scrolling down to the last option, Less Common Income, and Show more
- Scroll down to the last option, Miscellaneous Income, 1099-A, 1099-C and Start
- Choose the last option, Other reportable income and Start and Yes
- Enter the applicable description, such as 40% contingency attorney fees, and a negative amount, and Continue
