Legal settlement split into 3 parts. What will I be taxed on & how should I claim?

[Jet_OTA]

My awards for a legal settlement were split 3 ways. I am so confused about which I'll be taxed on, how to claim these & what it means for me filing my taxes this year (like a new tax bracket), etc.

1) Award for lost wages/back pay, less all relevant taxes & other withholdings, for which I will be issued a Form W-2. 

2) Award for penalties, for which I'll be issued a Form 1099.

3) Attorneys fees, for which my attorney will be issued a Form 1099-MISC.

Thank you in advance for your insight.

[DianeW777]

Let's take these questions one at a time as you have them listed.

1.  Award for lost wages/back pay, less all relevant taxes & other withholdings, for which I will be issued a Form W-2. 

   • File as  normal with the W-2

2. Award for penalties, for which I'll be issued a Form 1099. 

   • This will be 'Less Common Income' 

3. Attorneys fees, for which my attorney will be issued a Form 1099-MISC.

   • It's possible this will be issued to you as well - attorney fees are part of your settlement so be prepared.  Again this would be 'Less Common Income'

Follow the instructions for how to report.  

• Are legal settlements taxable?
• IRS Taxable Settlements
• Where to enter an award for a taxable settlement?