Defendant is asking a sexual harassment settlement go 30% W-2, 70% 1099 (and cut the check 3 ways, two to my client, 1 to me for fees). While I hear this is the norm in employment law, I want to make sure it’s my client benefiting from a tax perspective and not the defendant. My fear with defendant cutting the check to me directly for attorney fee is that the IRS might say it’s not really my client paying the fee (because my understanding is that fees for discrimination are deductible. Thoughts?

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I only had one and it was 25% w-2, 75% 1099. My understanding is the higher the w-2, the better for the company with taxes (and worse for your client).
They did cut the attorney fee check directly to our office and issued 1099 to client and to us for Atty fee amount.

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