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Posted by removeps-groups@yahoo.com on March 8, 2008, 12:58 pm
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On Mar 8, 8:15 am, cornfie...@iwon.com wrote:
> How does the IRS know that I received a settlement if -
>
> 1. I never received a 1099 from my former employer or my Lawyer. I
> called my Lawyer and was told they do not send clients a 1099
> 2. The check was sent directly to my lawyer, I never endorsed it.
> 3. The settlement amount was kept confidential from the court at the
> request of my former employer.
The government might have a copy of the 1099. You should ask the law
firm why they didn't send you a 1099. Maybe it got lost in the mail.
If you know they didn't withhold taxes and you are not able to obtain
a 1099, then you should probably just report the entire amount that
went into your bank account as other income, and maybe attach a
statement to your return. I've seen a settlement where part of the
payment was categorized as wages and taxes (federal, state, FICA,
state SDI) were withheld, part as interest (no taxes withheld), part
as other income (no taxes withheld). I don't see the difference
between interest and other income, except that more interest allows
you to claim more investment interest. The difference between wages
and other income is that wages is subject to FICA and SDI.
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