Settlement of a 35 year old class action suit against my employer resulted in a check for$25,171.38 From gallagher law firm for back pay.. How should i report this?

[Coleen3 · Accepted solution]

They should issue you a reporting form, either a 1099-Misc or a W-2, or sometimes both. If the money was issued to you in 2018, contact your attorney about not receiving the form.

[stoneaxe54]

I am being penalized for underpaying tax..can the $140 be waived?

[stoneaxe54]

The class action payment resulted in a $140 tax underpayment penalty..can it be waived?

[Coleen3]

You can try. It is a legitimate penalty if you underpaid.

[stoneaxe54]

Thank you for response

[Opus 17]

Don't accept Turbotax's offer to calculate and pay the penalty for you, it is almost always off by a few dollars and you get a bill from the IRS anyway.  Wait until they bill you, then you can request an abatement. (Note, interest can't be abated.)

Abatement <a rel="nofollow" target="_blank" href="https://www.irs.gov/businesses/small-businesses-self-employed/penalty-relief-due-to-first-time-penal...>

[Opus 17]

Back pay should be on a W-2, if the payment includes interest that should be on a 1099-MISC in box 3 or 1099-INT.  If not, we can help straighten it out.