Form 1099-MISC - Box 14 Gross Proceeds Paid to an Attorney

[Outsider]

My friend in 2017 opened her own law firm. She received a form 1099-MISC with amount in Box 14 "Gross Proceeds Paid to an Attorney" which was a settlement fee. Let's say it was 30k. 2/3 of that amount she transferred to her client. 1/3 she took for herself. Does she only have to report in box 14 10k or 30k?

[Molly_K]

You would enter it exactly as the 1099-MISC presents it as Gross Attorney Fees.(say the 30K in your example). When you continue onto the next screen, it will ask which portion is taxable to you. There, you can adjust it to what you actually received so that tax is calculated properly on your portion. 

[Outsider]

Thank you Molly!

[sschiffe]

I HAVE A FRIEND THAT OPENED A LAW OFFICE AND RECEIVED A 1099 MISC GROSS PROCEED WHEN TURBO TAX ASK THE QUESTION TAXABLE ATTORNEY FEES DOES THIS ONLY INCLUDE FEE OR INCLUDE ATTORNEY FEES AND EXPENSES.

[sschiffe]

WOULD THE PORTION TAXABLE INCLUDE EXPENSES COLLECTED SUCH AS AND ADJUSTERS FEE OR MEDICAL BILLS PAID ON THE CLIENTS BEHALF?

[HelenC12]

Your friend would report the total amount that is on Form 1099-MISC. The IRS will match his Form 1099-MISC with what was sent to them. 

Your friend should contact the issuer of the 1099-MISC form to find out if the total amount includes expenses/fees.

If it includes expenses, your friend would report the total amount and deduct the expenses when he completes his business return (Schedule C or Form 1065 or Form 1120 or Form 1120-S).

Here's how to add self-employment income if you file a Schedule C (Form 1040):

1. Open or continue your return
2. Select Search, enter schedule c and select the Jump to schedule c
   • Or go to Wages & Income and select Start or Revisit next to Self-employment income and expenses under Self-Employment
3. Answer Yes to Did you have any self-employment income or expenses?
   • If you've already entered self-employment work and need to enter more, select Add another line of work
4. Follow the on-screen instructions to enter your Schedule C

Here are the self-employed expenses you can deduct and where to enter them.

If you need Schedule C to report a 1099-NEC or 1099-MISC, search for 1099-NEC or 1099-misc, then select the Jump to link. We'll ask questions about your 1099 income and generate Schedule C if your situations calls for it.

@sschiffe