1099 reporting of injury settlement payments

June 14, 2022

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Q. I have a former employee who had a lawsuit that was settled. She is saying her 1099-MISC is incorrect because we lumped together the “physical injury” and “emotional injury” payments that were separately reflected in the settlement agreement for specific tax purposes. She states the 1099 should NOT have been reported as income. Should the settlement have gone on a different 1099 other than a 1099-MISC? How should this have been reported? A. (Answered by a 3rd party, independent advisory…

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Naturally, this forum doesn’t allow the kind of full information exchange necessary for the Institute of Finance & Management (IOFM) to provide legal advice and the Expert is not a tax attorney in any event. Please understand that the nature of our responses are limited by these constraints as well as the site’s Terms of Use. If you have further questions or suggestions about how we can improve IOFM, please let us know. 
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