I recently settled a lawsuit for back wages and, as a result of the settlement, received both a W-2 and a 1099-MISC issued from the defendant. The W-2 was for the amount that I personally received from the lawsuit and I received a check from the defendant for the amount listed in the W-2. I have entered the W-2 into Turbotax.

I didn't receive the amount listed in the 1099-MISC; that went directly to my attorneys to cover their costs via a check made payable to the attorneys. It was specified in the settlement agreement that my attorneys would also receive a 1099-MISC for the same amount that I did. So, in the end, the same 1099-MISC was sent out to two different parties.

But I'm not sure how to declare the 1099-MISC on my taxes since I didn't actually receive that money and therefore don't believe I have to pay taxes on it. At the same time, I believe that I do need to declare the 1099-MISC. Any ideas how I should handle this?