First, you would enter the 1099-MISC for the full amount of the settlement.
You may deduct the attorney's fees and create an 'above the line deduction' by following these steps:
- Down the left side of the screen, click Federal.
- Down the left side of the screen, click Wages & Income.
- Click Show more to the right of Less Common Income.
- To the right of Miscellaneous Income, 1099-A, 1099-C, click the Start / Revisit button.
- To the right of Other reportable income, click the Start / Revisit button.
- At the screen Other Taxable Income, enter a description “Attorney's fees” and the attorney's fees as a negative amount.
The entry will be reported:
- on line 8z of Schedule 1 of the Federal 1040 tax return, and
- on line 8 of the Federal 1040 tax return.
@GBM340
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