Lawsuit settlement

6 replies
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I received a settlement as a member of a class. With the check, I received a letter stating the settlement funds were considered to be recovered retirement benefits. The letter also stated the law firm had decided to issue a 1099-misc instead of 1099 R as it would save them and us time and money. How do I show this as retirement funds instead of wages since the 1099-misc section doesn't give me that option and I'm sure I'm being taxed higher as a result. What really stinks is the fact that the lawsuit was against the feds. 🙂

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Mike9241

Level 15

if you had no tax basis, for federal purposes a 1099-R vs a 1099-MISC won't matter they get taxed the same.

1099-misc box 3 other income. for some states it may well matter because they don't tax retirement benefits or give them preferential treatment.

Mike9241

LaidupinMTAuthor

Level 2

Thanks Mike, I was hoping that if it were classified as retirement income it might be different. It just burns a little since this was retirement income from the Federal Government. 🙂