Overview Video / Frequently Asked Questions
Frequently Asked Questions:
1. Do I have to a file tax return?
ANSWER: YES. The settlement money you received is income that you must report on your Federal tax return. If you are in a state that has state income tax, you will also need to file a tax return in that state as well. See #7 below.
2. Why did I get a Form 1099?
ANSWER: Form 1099 is used to report a number of types of taxable income. You were sent a Form 1099 because you received money from the Black Farmers settlement and that money is considered income to you. The Form 1099 documents this income. A copy of the 1099 was also sent to the IRS.
3. What do I do with the Form 1099?
ANSWER: The Form 1099 is meant to be used in the preparation of your Federal and State tax returns. If you prepare your taxes yourself, you will need the Form 1099 to do so. If someone else prepares your taxes for you, they will need it too.
4. What if I lost my Form 1099?
ANSWER: Contact the Claims Administrator at 1-877-810-8110.
5. Do I have to pay taxes on my settlement money?
ANSWER: YES. Funds received as the result of the Black Farmers case settlement are considered taxable income. Some of the tax liability associated with the settlement money you received has already been paid on your behalf to the IRS. See #6 below.
6. I thought a tax payment was part of my award amount—is this true?
ANSWER: It is true with regard to Federal income taxes, but not for state income taxes. A separate and additional “tax award” was sent directly to the IRS to cover the estimated Federal tax liability attributable to your award. However, ultimately your tax liability depends on your total income from all sources. Depending on your total income and any amounts you may have already paid in estimated tax payments for 2013, you may owe additional Federal taxes or you may entitled to receive a refund from the IRS. You should still consult with a tax professional to determine your specific Federal and state income tax liability.
7. Do I owe state income tax on my award?
ANSWER: If you live in Florida, Alaska, Nevada, Texas, Washington, Wyoming, or South Dakota, you do NOT have to pay state income tax on your award. If you live in any other state, you will have to pay state income tax on the money you received. Unlike the settlement funds that were sent to the IRS on your behalf for your estimated Federal tax liability for your settlement award, no funds were paid to cover any state income tax you may owe as a result of the settlement award you received. You should consult with a tax professional to determine your specific Federal and state income tax liability.