Hi. I know someone received income from a lawsuit for back wages. Lawyer fees were paid out directly to the lawyer. Does the attorney need to do a 1099 for his portion?

[dprz78]

lawyer fees were taken from the settlement and a check sent directly to the lawyer in his name. I would think the lawyer would file the 1099 for his portion but want to double check. Thank you.

[Mike9241]

When lawyer fees are taken out of a settlement check, the defendant is generally considered the payor and is required to issue a Form 1099, not the lawyer. However, when legal fees are paid directly to attorneys, a 1099-NEC form is often issued to the attorney, reflecting the payment for services.

[dprz78]

Thank you so much! Appreciate it.   The 1099 was issued in my friend’s name. I will ask them to contact the lawyer to see if they received a 1099-NEC. When I entered the 1099 for my friend, it’s making them pay all the taxes for the lawyer fees with no tax break even though they did not actually receive the money.