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<blockquote data-quote="dmac1" data-source="post: 3276919" data-attributes="member: 60252">For those who got big settlement checks- you can go back and look at previous years covered by the settlement, and for any years that you could have had more income and still would have owed zero taxes, you can subtract that difference from the settlement reported.For instance, one year, after deducting expenses I had negative net income of about $4200 [after subtracting standard deduction(or schedule A for those who itemized) and exemption]. So instead of reporting the full amount of the settlement as misc income on line 21(?), I subtract $4200. I have several years I will be able to do that. I believe I was able to write-off the full cost of a new vehicle in the year of purchase back then. My settlement only covered barely five years I was a &#039;contractor.&#039;I got much less in my settlement, about 10% of the $275k, and filed every year as a sole proprietor, but I will only owe about $400 in taxes on a $23k check I got early this year. Luckily, I also got my total settlement spread over late 2016 and early 2017, but I had to specifically ask ahead of time.</blockquote>

[QUOTE="dmac1, post: 3276919, member: 60252"] For those who got big settlement checks- you can go back and look at previous years covered by the settlement, and for any years that you could have had more income and still would have owed zero taxes, you can subtract that difference from the settlement reported. For instance, one year, after deducting expenses I had negative net income of about $4200 [after subtracting standard deduction(or schedule A for those who itemized) and exemption]. So instead of reporting the full amount of the settlement as misc income on line 21(?), I subtract $4200. I have several years I will be able to do that. I believe I was able to write-off the full cost of a new vehicle in the year of purchase back then. My settlement only covered barely five years I was a 'contractor.' I got much less in my settlement, about 10% of the $275k, and filed every year as a sole proprietor, but I will only owe about $400 in taxes on a $23k check I got early this year. Luckily, I also got my total settlement spread over late 2016 and early 2017, but I had to specifically ask ahead of time. [/QUOTE]

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