Job Discrimination Settlement Tax- 1099-MISC

[tranquility]

The right way is to treat things as they should be and not just what the document says.

 

[davew128]

Interestingly enough, I just had a case pop up today with someone receiving a W-2 from a STD insurance company regarding a workers compensation claim from 10 years ago.

 

[LdiJ]

So what do you consider the right way? Is there a way to avoid the difficulties with IRS prior to the issuance of the 1099? I just want to know how I can keep most of my settlement... if there are steps I can do prior to that 1099 being filled out so I can avoid difficulties or is it out of my hands until the form comes?

Its really not within your control.

The right way is that each element of the settlement be issued properly by the payer and handled properly on tax returns. Unfortunately, it rarely happens that way.

If you know what you are doing and can argue it properly with the payer, then you have a decent chance of getting them to handle it properly. You can also provide your preparer with ALL the documentation so that they can handle it for you properly as well.

 

[LdiJ]

The right way is to treat things as they should be and not just what the document says.

Absolutely...but that doesn't mean that you aren't going to have to fight with the IRS about it later on down the road.

 

[feddey26]

Thank you for your help!! Most years I have done my own taxes, but I definately will not attempt to tackle it this year.

 

[feddey26]

Interestingly enough, I just had a case pop up today with someone receiving a W-2 from a STD insurance company regarding a workers compensation claim from 10 years ago.

So will that person have to refile their taxes from 10 years ago? What a pain!! Isn't there a statute of limitation on taxes??... yeah right !!!

 

[davew128]

So will that person have to refile their taxes from 10 years ago? What a pain!! Isn't there a statute of limitation on taxes??... yeah right !!!

Well the person DIDN'T file a tax return, the IRS did it for him based on the W-2. So far as the statute of limitations goes, umm, you're wrong. Yeah right.

 

[feddey26]

Still plugging away at this....

I would like to give a suggestion to payee of the settlement on how best to enter amounts for tax purposes. Hoping to save difficulties next tax season...

Total settlement is for $xxxxx- (this was negotiated through the EEOC/Dept of Labor)-

On the W2 would go the - lost wages and monthly bonus

Would $xxx in my lost vested amount of my 401K go on the W2 or should that go on the 1099misc?

I also claimed $xxxx from the difference paid in going to a higher costing health insurance- would that amount go on a W2 or on the 1099misc?

The remainder of the money is for pain and suffering and that will go on the 1099misc.

Thanks for your advice.