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The Supreme Court has ruled that any wages awarded as either back pay or a settlement must be taxed. Tax is owed for the year the money is paid, not the year for which the amount represents compensation. If you receive back pay or a monetary settlement in 2009, your back pay taxes must be paid along with any other income tax you owe on your 2009 income tax return.
If the back pay you receive is considered wages, you should have received a W-2 for the amount you were paid, dated the year you received the money.
Back pay taxes should be filed for the year reported on the W-2 and filed with the rest of your W-2's and 1099's for that year. Back pay taxes should not be filed for the year in which you have been compensated if it is not the same as the year you received your back pay.
If your back pay is deemed a settlement or miscellaneous, and not wages (or you do not receive a W-2), the quickest way to complete filing on back pay taxes is to include the amount on the “other income” line on your tax return (line 21 of Form 1040).
If the back pay you receive is considered wages, you should have received a W-2 for the amount you were paid, dated the year you received the money.
Back pay taxes should be filed for the year reported on the W-2 and filed with the rest of your W-2's and 1099's for that year. Back pay taxes should not be filed for the year in which you have been compensated if it is not the same as the year you received your back pay.
If your back pay is deemed a settlement or miscellaneous, and not wages (or you do not receive a W-2), the quickest way to complete filing on back pay taxes is to include the amount on the “other income” line on your tax return (line 21 of Form 1040).
