My house, outbuildings, everything including trees burnt in a forest fire allegedly started due to negligence of a utility company. My homeowners insurance paid me for the damage done to structures, gardens, farm equipment and things like the well, but a suit was started for items that were personal and could not be replaced and etc. At a settlement, I received $500,000 less $200,000 that I agreed to being charged for attorney fees, expert fees, and others hired by my attorneys for their expertise in various professional fields. Am I liable for the taxes on the entire amount of $500,000?
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Unfortunately, the total amount of the settlement is considered taxable income. You may be able to claim the legal fees as a Miscellaneous Itemized deduction.
Taxable legal settlements are entered under Income from 1099-MISC, even if you didn't receive Form 1099-MISC.
See these instructions:
https://ttlc.intuit.com/replies/3302162
You may be able to deduct the legal fees, although the rules are complex. Legal Fees are included on Schedule A as a Miscellaneous Itemized Deduction, subject to a 2% limitation based on your Adjusted Gross Income. (TurboTax will make this determination for you.)
Search on "legal expenses, deduction" and click the "jump to" link to go directly to the start of this topic. Be sure to read the blue links ("Learn More") on the interview pages.
For more help, see IRS Settlements Brochure
Unfortunately, the total amount of the settlement is considered taxable income. You may be able to claim the legal fees as a Miscellaneous Itemized deduction.
Taxable legal settlements are entered under Income from 1099-MISC, even if you didn't receive Form 1099-MISC.
See these instructions:
https://ttlc.intuit.com/replies/3302162
You may be able to deduct the legal fees, although the rules are complex. Legal Fees are included on Schedule A as a Miscellaneous Itemized Deduction, subject to a 2% limitation based on your Adjusted Gross Income. (TurboTax will make this determination for you.)
Search on "legal expenses, deduction" and click the "jump to" link to go directly to the start of this topic. Be sure to read the blue links ("Learn More") on the interview pages.
For more help, see IRS Settlements Brochure
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