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<blockquote data-quote="bacha29" data-source="post: 3355341" data-attributes="member: 58386"><p>Thank you for your efforts regarding this matter. Here is what I found. Publication 590 sets forth what is considered to be &quot;qualified income&quot; as it pertains to IRA contributions and class action awards are not considered &quot;qualified income&quot;. In addition my payment was reported on 1099MISC&nbsp; Box 3.&nbsp; The rules that govern Box 3 describes the types of income that can be reported&nbsp; on Box 3 . Among those rules it states that it can be used to replace income that was lost. Now if you think about it the payment we received from the East Coast settlement was meant to replace income that was lost from deductions they took scanners uniforms claims&nbsp; etc&nbsp; which back then would have resulted in a higher net profit . Now what makes the East Coast settlement tough is that the question of&nbsp; whether or not we were employees as it pertains to the East Coast consolidated class action suits was never brought before the 7th US Circuit Court of Appeals to answer which in turn allows Judge Miller the lower federal court judge&#039;s ruling that we were contractors&nbsp; to stand. Likewise since the award could not for certain be considered self employment and even if it was all you&#039;re doing is sheltering $6500 while exposing the entire balance to SE tax. In our situation what&#039;s the sense in doing that? Likewise&nbsp; if considered self employment and we&#039;re receiving SSD we could be considered in violation of the SSD rules. Imagine the fight we would be in for with that? In addition if it was without question income subject to SE it would have&nbsp; been reported in Box 7 of the 1099 MISC. I asked Judge Miller for an itemized accounting of the settlement recognizing the amounts received on an annual basis but he refused .Then again given the not so pleasant experiences we had your inclined&nbsp; to be thankful just to able to get out of that nightmare with at least something. .</p></blockquote><p></p>

[QUOTE="bacha29, post: 3355341, member: 58386"] Thank you for your efforts regarding this matter. Here is what I found. Publication 590 sets forth what is considered to be "qualified income" as it pertains to IRA contributions and class action awards are not considered "qualified income". In addition my payment was reported on 1099MISC Box 3. The rules that govern Box 3 describes the types of income that can be reported on Box 3 . Among those rules it states that it can be used to replace income that was lost. Now if you think about it the payment we received from the East Coast settlement was meant to replace income that was lost from deductions they took scanners uniforms claims etc which back then would have resulted in a higher net profit . Now what makes the East Coast settlement tough is that the question of whether or not we were employees as it pertains to the East Coast consolidated class action suits was never brought before the 7th US Circuit Court of Appeals to answer which in turn allows Judge Miller the lower federal court judge's ruling that we were contractors to stand. Likewise since the award could not for certain be considered self employment and even if it was all you're doing is sheltering $6500 while exposing the entire balance to SE tax. In our situation what's the sense in doing that? Likewise if considered self employment and we're receiving SSD we could be considered in violation of the SSD rules. Imagine the fight we would be in for with that? In addition if it was without question income subject to SE it would have been reported in Box 7 of the 1099 MISC. I asked Judge Miller for an itemized accounting of the settlement recognizing the amounts received on an annual basis but he refused .Then again given the not so pleasant experiences we had your inclined to be thankful just to able to get out of that nightmare with at least something. . [/QUOTE]

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