Wrongfull Termination

[RLymanC]

Client was awarded a sum for being terminated in violation of a work contract.

Client was issued a 1099-MISC Box 7. Any comments, my thoughts are Box 3 line 21 income. Hard to due with box 7 used.

Is this award subject to Soc/Medicare taxes??? If not, where and how to report with box 7 used.

[S T]

Who

Issued the 1099 Misc Form?
The Attorney or the employer?
Your OP probably doesn't list enough details

There is a discussion at http://www.taxalmanac.org/index.php/..._tax_reporting


Sandy

[RLymanC]

The

employer issued the 1099.

A Federal mediator came in an determined that the company was in violation. Case was settled out of court and as I understand it the agreed upon payment is for damages.

[spencer]

Is the

award meant as a replacement of income or as a penalty for an injustice?

[geekgirldany]

Client was awarded a sum for being terminated in violation of a work contract.

Client was issued a 1099-MISC Box 7. Any comments, my thoughts are Box 3 line 21 income. Hard to due with box 7 used.

Is this award subject to Soc/Medicare taxes??? If not, where and how to report with box 7 used.

Was the person an employee for the company? I notice you say work contract so I was thinking they might have been getting 1099-Misc in the past.

If your client was an employee of this company then this settlement is really BackPay. The employer is liable to pay their share of fica tax. Here is something someone posted similar on a listserv:

http://mail.abanet.org/scripts/wa.exe?A2=aba-tax;ewGqzQ;20080617095839-0400

Here is some other info on taxability and different court cases:

http://www.weitzlux.com/irs_918.html