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Level 2
posted Feb 7, 2025 2:40:39 PM

Taxes owed when participate in class action lawsuit; 1099-MISC is wrong!

I was the lead plaintiff in an Equal Credit Opportunity Act (ECOA) class action lawsuit, we won the lawsuit, the total settlement was $300,000, and I got $10,000 for being the lead, but I received a 1099-MISC for $300,000!  How do I file my taxes and specifically, how do I deduct the $290,000?  The $290,000 went to the attorneys and other parties involved in lawsuit.

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1 Replies
Expert Alumni
Feb 7, 2025 4:34:51 PM

Contact the issuer of the 1099 MISC and have them issue you a corrected one. Trust me, this would make life easier on you. Otherwise if you report the $300,000 and then exclude $290,000, this could trigger an audit because of the large amount of money being excluded.