Class settlement payment
I received check for class settlement in April 2025 and got w-2 and 1099 Misc when requested in Feb 2026. Have 2 issues:
- Check received was for bigger amount than w-2 and 1099 Misc together, so what to report?
- Received 2 of W-2, one for wages from settlement fund with all boxes filled but without CA SDI in box 14 and other one from sued party that has nothing about wages just Box 14 for CA SDI and amount , How do I report W-2 without wages e file?
Thanks
Best Answer
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Thank you.
Tried to talk to them about check amount and difference, they told me that accountant will know that. I doubt but I will try to get somebody there who knows better.They did not send me any tax papers until I called them a t the end of January.
Regarding 2 (two) W-2s it like I mentioned before, one with amounts and all filled as any other I got has employer listed as settlement company, and one with just CA SDI $ 12.30on is issued by employer that was sued in this case my own, although it was not my case I just participated in that class action.
If I knew all that hoops with taxes for class settlement now I would not participate :)
You have a great day!
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Answers
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Hello Barco,
For your first question about the check amount being larger than the W-2 and 1099-MISC combined, please double check your settlement documents to check if the difference includes costs they determined were not income to you. You may also contact the attorney's office or the company that issued the forms to determine if the difference is taxable income to you.
If this amount is income to you and incorrectly left out, they may need to reissue the corrected forms to include it. If they determine the amount in question is not considered income to you, then document what the difference went towards and keep those documents with your financial records to show why it is not being reported as income.
Regarding the W2 forms, do they both have the same settlement EIN? If so, enter the information from both on the same W2 form screen.1 -
Hello Barco:
To follow up on the previous post from Taylor, report your W-2s by selecting the Income tab, and in the drop-down, click on Wages (W-2) and enter your information. If the W-2s you received represent back pay or lost wages, the IRS treats all back pay as wages in the year paid. Because it appears the W-2s represent wages/income paid in 2025, report them on your 2025 tax return.
Regarding how to report the class action settlement money you received is more difficult because we don’t know what those funds represent. For example, was it meant to compensate you, as a member of the class, for a loss you realized from an investment, or was the settlement money you received already reported to you on the 1099-Misc.
While there is no guarantee that we can advise on how best to report the class action settlement money, if you can let us know the name of the lawsuit, or the defendant/company that paid the settlement money, perhaps we might have a better understanding of what the case was about and how you should report the money you received.0 -
Thank you, contacted settlement admin and got 1099 INT which they forgot to send me!!! Now the only issue left is two W-2 one issued by plaintiff for all except CA SDI and other issued by defendant with only CS SDI, so having two different EIN. Not sure if I can add CA SDI on first or just disregard the second with CASDI only as it's just $ 12.30.
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Hi Barco,
If the W-2 does not have an amount in Box 1, then you cannot enter it. Just leave it off your return, or enter $1 in box one and enter it.0 -
Thank you!
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