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I only worked for my employer for a 3 weeks in the year 2017(was with the for 7 years). After that I left because of an on going dispute.
My unemployment was contested for many months. So I cashed out my 401k which was about $11,000 before taxes. I won the unemployment case-- I collected unemployment for about 6 months.
My unemployment was about $337.00 but I made them with held state and federal taxes which came to $295 a week. After taxes for the time I was on unemployment I took home $6,708.53.
I starting working for new job made about $3000 before taxes. I left that new job for another and expected to make $11,500 (before taxes) for the rest of the year of 2017.
My employer wants to settle the dispute for $14,000. They want to split the into two checks for $7,000. They will consider the $7,000 as lost wages (issued IRS form w-2) and the other $7,000 as non-wages damages (be issued a 1099).
Tax Wise----Would it be better for me to accept the whole $15,000 as non-wage damages or $7,500 in lost wages and the other $7,500 in non-wage damages?
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