1099 - NEC Harrassment Settlement

[Parchfamily]

Hi, 

I am curious how to report my 1099 - NEC. Are my attoney fees deductible? When I enter the info in Turbo Tax it's asking me expense questions like this was a job. This wasn't a job, it was a nightmare! AND now I'm being forced to pay taxes on something I tried to stop and was unable?

[ThomasM125]

You report the Form 1099-NEC in the Wages and Income section of TurboTax, then Other Common Income, then Income from Form 1099-NEC. You would indicate in TurboTax that the money is not associated with employment if you weren't being compensated for services provided. 

I assume you received form 1099-NEC for money you received that involved the services of a lawyer, and you want to know if your attorney fees are deductible against the money you received. It would depend on the circumstances, but normally only money you receive for injury or illness are not taxable.

For the most part legal fees are only deductible when associated with business or employment matters, things related to income. If you could clarify what the money you received was for we may be able to be more specific.

[Parchfamily]

This is related to a sexual harassment settlement. 

[JohnW152]

To enter these fees in TurboTax Online:

1. Open TurboTax Online
2. Select Tax Home in the left pane
3. On the  Hi, let's keep working on your taxes! screen, select the dropdown on the right side of the Income & Expenses box, then select Start, Continue or Pick up where you left off
4. Scroll down and select the Show more dropdown to the right of Less Common Income
5. Select  Start or Revisit to the right of Miscellaneous Income, 1099-A, 1099-C
6. Scroll down and select Start or Revisit to the right of Other reportable income
7. On the  Any Other Taxable Income? page, select Yes
8. On the  Other Taxable Income page, enter the description Qualifying Legal Fees and enter your fees as a negative amount (i.e., -5000).  Then, select Continue

To see your form entries in TurboTax Online:

1. Select Tax Tools in the left pane 
2. Select Tools
3. Select View Tax Summary
4. Select Preview my 1040 in the left pane

You'll see your negative entry on line 8 of Form 1040.

@Parchfamily