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1099 reporting for legal settlements
January 30, 2024
Q. Are legal settlement payments reportable for any of the following? - Emotional / Mental distress- Punitive damages (and to what extent?)- Wages through Accounts Payable Department vs Payroll- Labor Commissioner or Workers Comp Issues
A.
(Answered by IOFM's third-party tax experts)
In general: (1) Emotional/mental distress is excludable from the claimant's gross income (and for that reason not Form 1099 reportable) only if the distress is directly attributable to actual physical injury or…
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