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If I receive a settlement from my employing agency, do I have to pay taxes on it?
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Damn. Thanks for the response though.I could be wrong but I think that would be considered income, so yes.
If the settlement is due to injury, it’s usually not taxable. Most other settlements, including punitive damages, are considered income.
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.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.
in all seriousness, be careful what you say here (parenthetically, props for fighting this)
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.
It’s all likely taxable as income with some slight variance based on how it’s treated.
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).
Chuck would have better insight than me on this, but this seems to back that up as well:
https://www.americanbar.org/groups/...consequences_of_settling_an_employment_claim/
And, good luck Big_L. I hope you get your proper restitution.
Thanks.
Do you have an attorney in the case?