So I don't understand the difference between Gross Settlement Award and Wages. I got a w2 for 2021and a blank 1099-INT with the check and it seems I was only taxed on the wages, not the gross settlement award,
You would need an explanation of the reason for the difference. it could be a punitive damage award or something else. you should have gotten a letter with the payment call them
Also I paid state taxes to NY (shown on w2) but I live in TX where we don't have income tax and I've never paid state income tax before, just federal. I've never lived or even been to NY so will I have to file a state tax return for 2021 to NY because of this? Also should I have been taxed state income tax if I don't live in NY?
This is a legal question to be directed to the law firm that handled the settlement. The issue is that if the W-2 has NY W/H it has NY wages and that will cause issues if you don't file and pay the NY taxes. you would have to convince the NY Dept of Revenue that you never lived or work in NY. mosy likely what NY would tell you is to get a corrected W-2.
Let me know if I can provide any other clarifying detail.
