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shahid_syed
Level 2

Can I report compensation received and reported on 1099-MIS, block 3. This compensation is for car accident I was involved with injuries?

half of money was paid for medical treatment.
1 Best answer

Accepted Solutions
ToddL99
Expert Alumni

Can I report compensation received and reported on 1099-MIS, block 3. This compensation is for car accident I was involved with injuries?

Even if you received a Form 1099-MISC payment as compensation for medical costs you incurred and the pain and suffering you endured, you still have to report the payment as income. You can then enter offsetting adjustments to reflect that the payments were tax-free.

 

 

Enter the 1099-MISC information as follows in the 1099-MISC interview:  

  • Enter the 1099-Misc in the Other Common Income  section (Enter "1099 misc" in the Search Box and Select "Jump to 1099 misc form")  

  • For "Description", enter "Injury Compensation"  

  • Also check that it  does not  involve work like your main job, that it  did  not  involve an intent to make money, and is not a recurring payment (received in the past or expected in the future) 

  • The income will be reported on line 8 of Form 1040 of your return (Other income from Schedule 1, Line 9).  

To enter the "adjustments":  

  • Go to Less Common Income, Miscellaneous Income and Other reportable income. Enter "Lawsuit settlement" in the Search Box and Select "Jump to lawsuit settlement" "to get to this screen 

  • Continue to the screen "Other Taxable Income". Enter the description as "Injury Medical Costs" and the amount of those costs as a negative number. Entering "-$XXXX" here will offset the medical reimbursement amount included on the Form 1099-MISC. These are NOT wages.  

Add another "adjustment" for the pain & suffering component of the 1099-MISC amount. Description could be "Injury - Pain & Suffering"

 

Corresponding negative amounts will be entered, and line 8 of Schedule 1, will be reduced by the amount of the non-taxable payments.

View solution in original post

4 Replies
npierson7
Level 1

Can I report compensation received and reported on 1099-MIS, block 3. This compensation is for car accident I was involved with injuries?

Yes, you have to report the income and include it to your tax return. If you spent a big amount of money for medical treatments, it  could be more beneficial for you to use Itemized deduction and deduct medical expenses for the year that exceeds 7.5% of their adjusted gross income.

shahid_syed
Level 2

Can I report compensation received and reported on 1099-MIS, block 3. This compensation is for car accident I was involved with injuries?

But respectfully, physical damage and sickness is tax free per IRS and all publication clearly stated that language and getting credit for medical bills is not good enough.

ToddL99
Expert Alumni

Can I report compensation received and reported on 1099-MIS, block 3. This compensation is for car accident I was involved with injuries?

Even if you received a Form 1099-MISC payment as compensation for medical costs you incurred and the pain and suffering you endured, you still have to report the payment as income. You can then enter offsetting adjustments to reflect that the payments were tax-free.

 

 

Enter the 1099-MISC information as follows in the 1099-MISC interview:  

  • Enter the 1099-Misc in the Other Common Income  section (Enter "1099 misc" in the Search Box and Select "Jump to 1099 misc form")  

  • For "Description", enter "Injury Compensation"  

  • Also check that it  does not  involve work like your main job, that it  did  not  involve an intent to make money, and is not a recurring payment (received in the past or expected in the future) 

  • The income will be reported on line 8 of Form 1040 of your return (Other income from Schedule 1, Line 9).  

To enter the "adjustments":  

  • Go to Less Common Income, Miscellaneous Income and Other reportable income. Enter "Lawsuit settlement" in the Search Box and Select "Jump to lawsuit settlement" "to get to this screen 

  • Continue to the screen "Other Taxable Income". Enter the description as "Injury Medical Costs" and the amount of those costs as a negative number. Entering "-$XXXX" here will offset the medical reimbursement amount included on the Form 1099-MISC. These are NOT wages.  

Add another "adjustment" for the pain & suffering component of the 1099-MISC amount. Description could be "Injury - Pain & Suffering"

 

Corresponding negative amounts will be entered, and line 8 of Schedule 1, will be reduced by the amount of the non-taxable payments.

View solution in original post

shahid_syed
Level 2

Can I report compensation received and reported on 1099-MIS, block 3. This compensation is for car accident I was involved with injuries?

Thank you Thank you, this is great help!

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