Summary of Reporting Obligations: W-2s and 1099s

This is the tenth in a series of articles on issues surrounding the Taxation of Settlements and Verdicts. The chart below summarizes the reporting obligations of the payor.

Damage Award	Payments to Current or Former Employee	Payments Not Segregated from Wage Award to Employee	Payments to Non-Employee *
IRS Section 104	None	None	None
Back Pay	W-2	W-2	N/A
Front Pay	W-2	W-2	N/A
Emotional Distress	1099 MISC	W-2	1099 MISC
Medical Reimbursement	None	W-2	1099 MISC
Medical Insurance Reimbursement	None	W-2	1099 MISC
Pre Judgment Interest	1099-INT	W-2	1099-INT
Post Judgment Interest	1099-INT	W-2	1099-INT
Wrongful Refusal to Hire	W-2	W-2	W-2
Wrongful Dismissal	W-2	W-2	N/A
Balance of Contract	1099 MISC	W-2	1099 MISC
Liquidated Damages	1099 MISC	W-2	1099 MISC
Deductible Losses	None	None	None
Punitive	1099 MISC or W-2	W-2	1099 MISC

* Payments of Attorney’s Fees – In the context of settlements and verdicts from employment litigation, fees paid to an attorney of $600 or more, paid in the course of the payor’s trade or business, are reportable in box 7 of Form 1099-MISC. If the payment to the attorney includes both an award to the attorney’s client and attorney’s fees, and the potion attributable to attorney’s fee cannot be determined, the total amount paid to the attorney (gross proceeds) must be reported in box 14. These rules apply even when the legal services are not provided to the payor or when the attorney is not the exclusive payee. The term “attorney” includes a law firm or other provider of legal services.