Deducting Attorney Fee Against Employer for a Title VII Unlawful Discrimination Settlement (with a caveat)
I’m seeking advice on how to report an unlawful employee discrimination settlement against my employer under Title VII which I received in tax year 2025. There is a minor caveat.
I received an out of court employment discrimination settlement which I had filed against my employer with the EEOC, and I also hired a private attorney to represent me. The orgin of the complaint is unlawful discrimination under Title VII. My attorney worked with the EEOC, and my employer decided to settle for $900,000 which I agreed. My attorney fee was $270,000. My employer paid the attorney directly the $270,000 attorney fee and then the employer gave me a physical check for the balance directly (which was $630,000.)
I expected to receive a 1099-MISC from my employer for the entire $900,000 settlement. I was going to enter that 1099-MISC as is (which would get assigned as other income in turbo tax.) I was then going to deduct the $270,000 attorney fee on schedule 1 line 24-h as a “Qualified attorney fees paid after 10/22/04 for unlawful discrimination.”
The employer instead sent me a 1099-MISC only for the amount they paid me directly, which was $630,000. They did not include the amount of $270.000 which they paid directly to the attorney.
With this situation, I believe it may be correct to enter the 1099-MISC for $630,000 as reported (which will be assigned as other income in turbo tax), then enter the $270,000 attorney fee that was paid directly to the attorney as prizes and awards (on schedule 1 line 8-i), then show an adjustment in the amount of $270,000 for the attorney fee on Schedule 1 line 24-h. In this way, I am reporting the entire amount of the settlement as required by the IRS.
Does this seem correct?