Lawsuit Settlement Money Check W-9/1099-MISC

[jonathan22]

Hello,

A few questions about a legal settlement I was involved in:

1. I received a $550 settlement payment check for a lawsuit I was involved in. This money is not taxable since it is below $600, correct?

2. The settlement is asking that I fill out a W9 before December 18, 2022 in order to receive the rest of the money in the settlement and execute a 1099-MISC form. (approximately $2,000). Would this money be taxable for 2022, of 2023 when I will most likely receive the rest of the money/check. Does the money go on my tax return for the date/year which I filled out the W-9, or the date/year I received the money? Would they then mail me a 1099-MISC? I am very new to this.

[pjn]

Point #1. Wrong. The $550 is taxable unless received as a result of personal injuries. It usually non taxable. You are confusing the payer requirement to issue a F1099 which in certain cases, is for amounts paid above $600. All income received is taxable unless excluded by law. IRC 61.

2. If you don't fill out a W-9, the payer has a requirement to withhold 24% at source as a tax withholding. You will get the net.  The amounts received are generally taxable in the year received.   

Hope it helps