1099 misc - how to show contingency fee paid to atty

[JB7674]

I received a 1099 MISC for the full settlement amount in a lawsuit; however 40% was actually paid di...

[KathrynG3]

To show only your portion of Form 1099-MISC for a legal settlement, it is a best practice to first enter Form 1099-MISC in full, assuming the legal settlement is taxable. Next, enter a negative amount for the portion issued to the attorney for contingency fees. 

To do this in TurboTax Deluxe or higher: 

For Form 1099-MISC in Full:

1. From the left menu, go to Federal and select the first tab, Wages & Income
2. Add more income by scrolling down to the last option, Other Common Income, and Show more
3. Scroll down to Form 1099-MISC and Start

For the 40% contingency portion, 

1. From the left menu, go to Federal and select the first tab, Wages & Income
2. Add more income by scrolling down to the last option, Less Common Income, and Show more
3. Scroll down to the last option, Miscellaneous Income, 1099-A, 1099-C and Start
4. Choose the last option, Other reportable income and Start and Yes
5. Enter the applicable description, such as 40% contingency attorney fees, and a negative amount, and Continue

[JB7674]

Thank You!

[KathrynG3]

You're welcome!