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Discrimination lawsuit income and expense treatment advise?

Colmatt
Level 5

Client received settlement in employment discrimination suit.  10,000 was treated as wages and she received the appropriate W-2.  Additional $10,000 came to her directly and another $10,000 went to the attorney.  $30,000 being the total award. She received 1099- misc with box 14 "Gross paid to an attorney" for his $10,000. She did not receive another 1099 for the $10,000 she got directly yet but it was like pulling teeth to get the W-2.  Anyway, I realize the 10,000 goes to wages and the $20,000 goes to other income where I can net out the lawyer fee of $10,000.  Section 62a(20) allows discrimination legal fees to be above the line deductions. First of all, is this section 62 still intact? Secondly, the program wants to link that "Gross paid to Attorney" to a schedule C.  I am thinking of overriding to link to "other income where it belongs.  Bottom line, 10,000 to wages and net $10,000 to other income correct?  Any advice on how to get system to take it?

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TaxGuyBill
Level 15

Yes, it is still intact.

So $10,000 to wages, $20,000 to other income (Line 21), and a subtraction of $10,000 (Line 36).

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6 Comments 6
TaxGuyBill
Level 15

Yes, it is still intact.

So $10,000 to wages, $20,000 to other income (Line 21), and a subtraction of $10,000 (Line 36).

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Happy-Tax
Level 5

"Other Adjustments to Income Smart Worksheet":

Line H: Enter "UDC" and enter $10,000 on the amount line.

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Colmatt
Level 5
what is UDC ?
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sjrcpa
Level 15
What IRS says to label the adj for atty fees.

Ex-AllStar
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Happy-Tax
Level 5
Unlawful Discrimination Claim. See the instructions for Line 36 in Column 2 on page 97 of the 2018 Form 1040 instructions, which will send you to Pub 525.
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Colmatt
Level 5
Fabulous, Thank you!!
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