If you are having trouble getting the 1099-MISC to work right, enter the amount in Other Income (in spite of what TurboTax says). If the 1099-MISC were entered correctly, it would end up in the same place (line 8 of Schedule 1).
- Click Federal in the left column
- Click Wages & Income at the top
- Scroll down to Less Common Income. Click Show more
- Start Miscellaneous Income, 1099-A, 1099-C
- Start Other reportable income
- Say Yes to Any Other Taxable Income?
- Enter a description (legal fees from 1099-MISC) and amount ($xxx)
Attorney’s fees are included in income because—I assume they were part of the settlement and not something you paid out of pocket. You can no longer deduct legal fees related to producing or collecting taxable income or getting tax advice.
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