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If an insurance company requests a completed W-9 Form as a stipulation to a settlement agreement for compensation for damage to credit as a result of an improper claim denial, will these monies be taxed as income and treated as payment to ind. contractor?
AI accountant’s answer:

Settlement money is usually always taxable unless it's the result of, or related to, a physical injury. It will not be reported as "earned income," however, meaning it won't be subject to self-employment taxes. It will probably be reported on a 1099-MISC rather than a 1099-NEC (which are for independent contractors).

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Answer

Settlement money is usually always taxable unless it's the result of, or related to, a physical injury. It will not be reported as "earned income," however, meaning it won't be subject to self-employment taxes. It will probably be reported on a 1099-MISC rather than a 1099-NEC (which are for independent contractors).

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Keeper Staff

Keeper is a delightfully smart tax filing software that's especially useful for people with 1099 contracting and freelance income. Our blog breaks down IRS guidance with real-world examples and analysis by tax professionals — empowering taxpayers to save money and take control of their finances.

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