A little bit of a complex situation. In 2022 I received a settlement from a previous employment for a claim of age discrimination. The employer issued three (3) checks. One check is a pay check for back wages paid to me in 2023. That's pretty straight forward. One check is for Non wage compensation they called "Pain and suffering". For that one I got a check and they sent a 1099-MISC with the amount in box 3. One check was sent directly to the law firm for their 40% take. I got a 1099-MISC for that in 2022. I entered the law firm 1099 in my 2022 taxes and reduced the amount of the 1099 to zero by adding the total amount to Section 2 worksheet in the "Legal fees for discrimination" line. That made it zero for me.
However, now in 2023 I have the pay stub and the 1099-MISC described above. One response in the community says to ignore the 1099 and another says to enter it with a trailing 1099-MISC for a negative amount. That doesn't work in TT, best I can tell. My question is, should I just not enter the 1099-MISC? Or should I list the legal fees again in the deduction box even though I did that in 2022 to zero out the payment to law firm? Should I amend 2022 and remove the law firm 1099-MISC, add it to 2023 and than put the full deduction amount in?
