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Question
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?
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 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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