1099-misc - from law suit

Forum|Forum|1 year ago
March 30, 2025
1 reply
0 views

Can you deduct the legal fees and costs to repair my home due to the road construction in front of our house caused a sewer backup and had to file a law suit to get them to pay. It only covered the cost to repair and now I have a tax bill to pay for the reimbursement. Is there a way to include the cost?

KrisD15

Level 15

No, Attorney Fees are not deductible.

If the settlement was not more than the cost to remedy the damage (or the loss in basis/value if the damage was not repaired) the 1099-MISC is not taxable.

HERE is an IRS link

If you have receipts for the repairs, and the repairs were as much or more than the settlement, you needn't pay tax on that money.

Enter the 1099-MISC Under

Wages & Income
Other Common Income
Income from Form 1099-MISC START

Enter the 1099-MISC as it was reported, Type "Property Damage" in for the description,

Select "None of these apply" for uncommon situations,
"NO" not like main job,
Only got it in 2024,
"NO" no intent to earn money,
DONE

THIS GETS THE FORM ON YOUR RETURN, now back out the cost for repair (or loss in basis)

Wages & Income
LESS COMMON INCOME
Miscellaneous Income, 1099-A, 1099-C START
Scroll all the way down to the LAST option- Other reportable income START

Type "cost to repair damage" or some other description the IRS will understand and enter the amount AS A NEGATIVE AMOUNT (put a minus sign (-) in front of the number
Done

The 1099-MISC as well as the negating entry will both be on Schedule 1 line 8z

**Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"