Form 1098-F: Fines, Penalties, and Other Amounts
Report certain government fines and penalties that may not be deductible.
Filing Deadline
January 31 (to payor) / February 28 (paper) or March 31 (e-file) to IRS
Purpose
Track non-deductible settlements and fines
Recent Form
Implements Tax Cuts and Jobs Act provisions
Overview
Form 1098-F is used by governments and specified nongovernmental entities to report amounts paid related to violations or potential violations of law. This form implements the Tax Cuts and Jobs Act, which disallowed deductions for many fines and penalties.
The form helps ensure that taxpayers and the IRS can identify payments that may not be deductible as business expenses.
Who Must File
Required Filers
- •Appropriate government officials (federal, state, local)
- •Certain nongovernmental regulatory/enforcement entities
- •Received $600+ from payor related to violation of law
- •Amount includes fine, penalty, or restitution/remediation
Exceptions & Notes
- ✕Not required for amounts under $600
- ✕Not required for court-ordered restitution to individuals
- ✕Certain other exceptions listed in instructions
Form Structure & Instructions
Here's what information is required in each section:
Payment Information
Details of fines, penalties, and other amounts
Settlement Details
Information about the legal settlement
Important Filing Notes
Non-Deductible Fines and Penalties
Generally, amounts paid as fines or penalties to a government for violation of law are not deductible. This includes most amounts in Box 1 that are not allocated to restitution or compliance.
Restitution May Be Deductible
Amounts paid for restitution or remediation (Box 2) may be deductible if paid to come into compliance with law or for remediation of property. Identification and allocation are critical.
Must Identify Amounts
Settlement agreements should specifically identify and allocate amounts between non-deductible fines/penalties and potentially deductible restitution/remediation to support tax treatment.
Investigation and Litigation Costs
Legal fees and costs related to defense and settlement negotiations are generally still deductible as ordinary business expenses, even if the underlying fine is not.
Government Settlement Reporting
Navigate the complex requirements of Form 1098-F for reporting fines, penalties, and settlements with expert guidance.
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