topic Re: 1099MISC in Deductions & credits

1099MISC

GoHokies1234 — Tue, 11 Feb 2020 16:52:25 GMT

If I receive a 1099misc for a settlement that involved me going after my bank for money taken from me by fraudulent transactions that was already taxed so I still need to report this? I would be paying tax on this twice. I understand that if I get more than what was taken from me to report as taxable but what about the rest? please help

Re: 1099MISC

KathrynG3 — Tue, 11 Feb 2020 17:13:09 GMT

Be sure to check the type of award you received in your Final Settlement Agreement.

Please check out these articles:

Are legal settlements taxable?

Where do I enter an award from a taxable legal settlement?

Re: 1099MISC

Opus 17 — Tue, 11 Feb 2020 17:19:48 GMT

You are on the right track but to really know, we would need to know more about the circumstances. You would also have to report the income if you took a deductible loss at some point (like a theft and casualty loss).

For example, if someone fraudulently accessed your account and stole $5,000 and the bank reimbursed you (after suing them), that's not taxable unless you previously took the theft as a deductible loss. (In that case you have to follow the tax benefit rule to see how much might be taxable.)

Another example, some military taxpayers are getting rebates of mortgage interest when the lender overcharged them under certain laws protecting military homeowners. The interest rebate is not taxable income per se, but if they previously deducted the mortgage interest as an itemized deduction, then some or all of the rebate may be a taxable recovery (reimbursement of a previous deduction.)

Now, if you determine the money is not taxable at all, the IRS recommended procedure is to leave the income off your return. File by mail, not electronically. Attach a copy of the 1099 and a written explanation of why you did not include it in your taxable income. Don't attach other documents proving your case, but keep them handy in case you are questioned. There is a procedure to e-file with the 1099-MISC as well by creating a negative adjustment, but that will probably guarantee that you get a nastygram from the IRS.

Re: 1099MISC

GoHokies1234 — Tue, 11 Feb 2020 18:31:20 GMT

thank you for the response. to answer your question, I did not claim this as a loss. All of this happened in the same year from losing the money and getting the settlement. I have yet to receive a 1099 from the bank however I was anticipating that I would be and making sure I file this correctly hoping that it was NOT taxable

Re: 1099MISC

Opus 17 — Tue, 11 Feb 2020 18:38:31 GMT

If someone stole money from you and you managed to make the bank take the blame and make you whole again, it would not be taxable, and I would be surprised if they 1099-ed you at all. In any case, 1099s must be mailed by January 31 so, depending on the slowness of the mail in your area, you are probably in the clear, or nearly so.