In June of last year, I mentioned receiving a $628.65 check from E*TRADE. This was the result of a class action settlement in the case of Greenberg v. E*TRADE. To give some background, the settlement arose out of allegations that E*TRADE recorded telephone calls without notifying the other party that they are being recorded. When I received my check back in June, I was surprised at the amount of the settlement.
Last week, I received a 1099-MISC form that lists the amount of $628.65 as "other income". As I mentioned in my previous post, only people in California were entitled to the full $628.65. People in other states received one-fifth of that amount or $125.73. Did anybody else get a 1099-MISC for this settlement?
The real question at this time is "How is one supposed to report this payment on their taxes?" Some readers have indicated that they've received conflicting information about how to account for this windfall. However, I believe that the correct answer is to report it as "Other Income" (This is Line 21 on Form 1040). But, I want to ask my readers if they agree that this is correct?
Disclaimer: This discussion is for information only. PFStock does not provide tax or investment advice. I encourages readers to consult with a tax adviser if they have specific questions when preparing their taxes.