Questions about a settlement (1 Viewer)

rob22278

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If the settlement is due to injury, it’s usually not taxable. Most other settlements, including punitive damages, are considered income.
 

Oye

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but you can take the amount of that settlement up to 60k and gift it to your spouse and the IRS can't touch it. See, the IRS allows you a one-time-only gift to your spouse. It's good up to sixty thousand dollars. It's perfectly legal. Go ask the IRS, they'll say the same thing.

Actually, I feel silly telling you all this. I'm sure you would have investigated the matter yourself.

But if you want to ask any further questions, here's my card:

 
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Yeah, depends on what it’s for.
I'm sure it would be considered punitive damages. I have a "pending" case against my current agency. A union rep told me they will probably offer me 300K to shut up and go away. It's racial discrimination and retaliation. This is a preliminary and very, very basic explanation of my situation.
 

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I'm sure it would be considered punitive damages. I have a "pending" case against my current agency. A union rep told me they will probably offer me 300K to shut up and go away. It's racial discrimination and retaliation. This is a preliminary and very, very basic explanation of my situation.
in all seriousness, be careful what you say here (parenthetically, props for fighting this)
 
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in all seriousness, be careful what you say here (parenthetically, props for fighting this)
Oh, for sure. I have been dealing with this for about a year now. I filed a Whistleblower complaint and boom they came at me harder than Darth Vader in the Empire Strikes Back. Thanks too.
 

superchuck500

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I'm sure it would be considered punitive damages. I have a "pending" case against my current agency. A union rep told me they will probably offer me 300K to shut up and go away. It's racial discrimination and retaliation. This is a preliminary and very, very basic explanation of my situation.
There may be some variation by state but I doubt it. Here’s a good summary: http://www.zatlaw.com/is-my-employment-case-settlement-taxable-some-considerations-for-the-layperson/

It’s all likely taxable as income with some slight variance based on how it’s treated.
 

zatsnzapps

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It’s all likely taxable as income with some slight variance based on how it’s treated.
Chuck would have better insight than me on this, but this seems to back that up as well:

Guideline #1: Almost All Settlement Proceeds Are Included in Plaintiff’s Taxable Income.

As a general rule, nearly all settlement payments in an employment lawsuit are included in the plaintiff’s taxable income. This includes payments for back wages, front pay, emotional distress damages, interest awards, and punitive/liquidated damages. The only exceptions to this general rule are: (1) certain payments for attorneys’ fees (which are discussed below in Guideline #2); and (2) payments intended to compensate the plaintiff for damages “on account of personal physical injuries or physical sickness.” I.R.C. § 104(a)(2) (emphasis added). In addition, payments for mental anguish are not taxable if they do not exceed the actual medical expenses attributable to the emotional distress. I.R.C. §§ 61, 104(a)(2).
https://www.americanbar.org/groups/young_lawyers/publications/the_101_201_practice_series/tax_consequences_of_settling_an_employment_claim/

And, good luck Big_L. I hope you get your proper restitution.
 
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Do you have an attorney in the case?
I have spoken to one who specializes in these Whistleblower cases. Since I have not received any disciplinary action as of yet, per the union (AFGE) I am waiting for the OAWP investigators then after the administrative process myself and 4 other co-plaintiffs will file a civil suit. The union said they would possibly pay for my attorney. I am friends with an attorney in KC, but I don't know if he specializes in this type of case. I haven't really asked him either. So to answer your question right now, no, I (we) don't have an attorney.
 

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