1099-Misc Class Action Settlement

[jayarmenta22]

Hello, 

I received a settlement for a class action lawsuit against target for not providing seats to cashiers. The amount is $368. Do I have to claim this on my taxes? The amount is listed in box (3) for other income and not sure if this would be considered tax or non-taxable? Also, don't know under what "type" of other income would this be considered. 

Note: I'm filing taxes in California, not sure if that makes a difference.

[Irene2805]

Yes - the proceeds from your lawsuit are taxable.  It sounds as if you received a 1099-MISC reporting the income. This is how you should enter it in TurboTax:

1. Click on Federal > Wages & Income  [In TT Self-Employed:  Personal > Personal Income].
2. Scroll down to the Other Common Income section and click on the Start/Update box next to Income from Form 1099-MISC.
3. If you previously entered a 1099-MISC. in your return, you will be brought to the 1099-MISC Summary page.  Click on the Add Another 1099-MISC. box to add a new form [or Edit to change an existing form].
4. If you haven't already entered a 1099-MISC, answer Yes to the question Did you get a 1099-MISC? (even if you didn't get one).
5. On the Let's get the info from your 1099-MISC screen, complete the top part and then enter the award amount in Box 3 Other Income. 
6. Fill out any other boxes from your paper 1099-MISC, then click Continue.
7. Enter a reason for the 1099-MISC,
8. On the screen, Does one of these uncommon situations apply? select This was money from a lawsuit settlement  and then answer the back wages question before clicking Continue.  

[jayarmenta22]

Thanks Irene2805, I really appreciate your help 🙂

[TamayaW1]

I believe I got a 1099 C form from a settlement from a class action lawsuit from a previous job and was wondering if this means I got the check from back wages. On the form it says..

"The parties agree that 25% of individual settlement amounts are for alleged unpaid wages, and subject payroll taxes to be reported on an IRS Form W-2; 75% shall be allocated as penalties and interest and will be reported on IRS Form 1099." 

Does this mean it was a settlement for back wages? Turbo tax also asks me to enter the amount that was for back wages but I don't know where to find it.

[Vanessa A]

A 1099-C is for cancellation of debt.  Do you mean a 1099-Misc? 

If you received an amount and 25% was for back wages, then you would multiple the full amount you received by .25 and enter that as the amount for back wages.