record settlement payment received from lawsuit

Nssbeca33 · ‎April 17, 2021

Hi Everyone:

I am trying to find out how to record a payment I received from a lawsuit. I will use an example below for my question:

I received $22,000 from an accident

the attorney took their cut

I had bills from the attorney for time and copy service etc...

and they paid my medical I received the balance lets say $5,000

How do I enter this? Is it considered income or a liability? Do I record the expenses?

I itemize for my taxes so I want to make sure I get this correct.

Thanks

HyJohn · ‎May 05, 2021

I'm not a CPA, but I would break this out just like it is.

The full settlement amount would be coded to Income. The Attorney fees would be coded to professional services, the medical bills deducted from the settlement check would be coded to medical expenses.

I think your real question is how to record the deposit to show all of this in QBooks as the check you got was substantially less than the settlement amount. I would just do this all in a deposit. Split out each item one by one in the deposit until it matches the check amount?

Let me know if you need more help with this.

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