I received a 1099-MISC for Statutory fees in a wage lawsuit. Paid attorney fees were not taken out on this form. How can I deduct the legal fees that where paid?

[macuser_22]

Attorney fees are not deductible in 2018 unless it was an employee discrimination legal settlement.  Is that the case?

[Opus 17]

Did the case involve a claim for unlawful discrimination?  If not, you can't deduct the fees.  If so, there is a special procedure that requires you to be using Turbotax installed on your own computer, not the online version.

[jordonr]

Yes, this is for unlawful discrimination by the U.S. government

[Opus 17 · Accepted solution]

Well, I'm not sure what you mean by you got a 1099-MISC for fees.  You get a 1099 for income.  You should have gotten a 1099-MISC for the entire gross amount, even if you received less due to attorney fees and other fees.

The gross amount of the settlement is taxable income, no matter what your 1099-MISC form indicates.

You can take a special deduction for attorney fees if the settlement was in an unlawful discrimination case or a case against the US government.

You need to be using Turbotax installed on your own computer.  Change to Forms mode.  Access schedule 1, and look for the schedule 1 smart worksheet.  I believe it is part of the schedule 1 worksheet or it may be accessible within schedule 1 by double-clicking on line 36.  Find the line 36 adjustments.  There is an adjustment (it might be line f) for legal expenses.  Enter the expenses here and enter "UDC" as the reason on the space next to the amount.  

This will place the legal fees as a special deduction on line 36 of schedule 1 with the notation "UDC" (unlawful discrimination claim).  

[ssbryce]

I have a similar situation. There is no longer a line 36 and the choices are limited. Where does this deduction go for the 2020 tax year?

[BillM223]

For the 2020 tax year, the equivalent line is line 22 on Schedule 1 (1040). As Opus said before, add the amount to the result of lines 10 to 21 and enter "UDC" and the new total on line 22. 

See the top of page 94 in the 1040 Instructions.