Report the 1099-MISC just as you received it - showing $10,000 of income. See Where do I enter an award from a taxable legal settlement? for instructions.
Report the balance of your net proceeds, $14,235, as "other Reportable Income".
-
Type "other reportable income" in the search window (or in the Search Topic window for desktop versions)
-
Click on "jump to other reportable income" (or "other reportable income" in the Search Topic results)
-
Answer "No" to "Did you receive any other wages?"
-
Select "Other reportable income" from the Miscellaneous income list
-
Select Add another Income item on the Other Miscellaneous Income Summary screen
-
Enter a Description (Lawsuit settlement) and amount ($14,235), then click on Continue
This income will appear on Line 8, of Schedule 1 and Form 1040.
