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Reporting Legal Settlement Payments to a Former Employee and Their Attorney
October 8, 2025
Q. We had a former employee go through a legal settlement. They were awarded $75,000. Of that amount, $37,500 was deemed base salary, less lawful deductions. This amount was paid through payroll.
The amount of $27,500 was paid to the recipient from our AP Dept & the amount of $10,000 was paid for attorney fees to the employee's attorney.
For 1099-MISC purposes, would the recipient receive a 1099-MISC for $27,500 & the law firm receive a 1099-MISC for 10,000? The amount of $37,500 would not be…
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