We paid out a legal settlement by check, payable to the attorney and two of our members. Do we issue a 1099 for the full amount to each of the payees?


You will need to issue a 1099 to each of the plaintiffs in addition to the attorney; however, you have to determine the split of the settlement, and report to each plaintiff their share of the settlement in box 3. A 1099 also goes to the attorney with the full amount reported in box 14.  We confirmed this with IRS information reporting specialist Mr. McLaughlin, ID# 1002957178.

So for example, if the total settlement was $100,000, covering an award of $50,000 to each plaintiff, and you issued one check for $100,000 naming the attorney and both plaintiffs, then you would issue 1099s with $50,000 in box 3 to each plaintiff, and a 1099 with $100,000 in box 14 to the attorney.

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