Level 5

Solved

Insurance Settlement with related costs

Forum|Forum|1 year ago
March 25, 2025
4 replies
20 views

Hi, any help much appreciated,

Client received a 1099-MISC from a lawyer as settlement for storm damage in Florida. Has $75k in Box 3 as other income. Assume we report this as other income.

Client has provided details $90k of out-of-pocket remediation expenses for the same incident.

Where do I enter these expenses to negate the $75k of income? Cannot find a category in Schedule 1 for "other adjustments", or am I thinking about this incorrectly?

Thanks Nolan

ProSeries Professional

This topic has been closed for replies.

Best answer by nolanm

Report the 1099 MISC as other income.

Also report an Other Income = negative same number with description - Shown on line X of Form Y.

Thank you, this may be my only option as client does not have disaster ID number,

sjrcpa

Level 15

Form 4684 if this was an allowable disaster.

The more I know the more I don’t know.

Just-Lisa-Now-

Intuit Community Champion

If they used that money to rebuild their home, I think IRC 139 might apply here to exclude that income or Federal Disaster Tax Relief Act of 2023 might make that settlement excludable as well.

♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪

BobKamman

Level 15

Probably did not require a 1099, but maybe required a lawyer to negotiate with the insurance company and they thought it might be a good idea since they got one too. It is not income and you are just playing "trick the IRS computer" by trying to add it in just to subtract it out. Was it business property or a disaster area? Then 4684 should work. Otherwise, I would attach an explanation to the return. Others, of course, would play "trick the computer," increasing the likelihood of an audit by increasing the client's gross income.

sjrcpa

Level 15

@BobKamman It has been widely reported that the only way to get settlement proceeds from an insurance company in Florida is to bring suit.

AI gave this:

In 2020, 79% of homeowners insurance lawsuits nationwide were filed in Florida, even though the state only accounted for 9% of the nation's homeowners insurance claims. This indicates a disproportionately high number of lawsuits relative to the number of claims, suggesting that a significant portion of Florida homeowners may need to sue to get money from their insurance companies.

The more I know the more I don’t know.

BobKamman

Level 15

About 90 percent of all insurance claims are settled without escalating into a court fight, said Charles Nyce, a professor of risk management and insurance at Florida State University’s College of Business.

https://www.pbs.org/newshour/nation/the-basics-of-navigating-the-insurance-claims-process-after-a-destructive-hurricane

M

msl217

Level 3

Bumping this so I can get notified of replies. Have the same question. 1099-misc from Florida homeowners insurance claim with no clear way to input expenses.

Sign up

Login with SSO

Let's get you signed in

Login with SSO

Scanning file for viruses.

This file cannot be downloaded