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1099 Reporting for Attorney Payments on Settlement Damages
January 28, 2025
Q. We have issued a payment to attorney only for settlement damages for a prior employee. Do we only issue a 1099 for Gross Attorney Proceeds to the attorney.
A.
(Answered by IOFM's third-party tax expert)
This settlement may need to be reported to the employee as well — it depends on if the settlement is taxable to the employee. Generally settlements are taxable to the recipient unless the law specifically provides an exception. Medical damages are an example of an exception, where such…
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