2006-10-23 01:27:10 · 4 answers · asked by qa43700 1 in Business & Finance ➔ Taxes ➔ United States
It depends on the lawsuit.
For recovery of a loss, it is not taxable unless you already took a tax deduction for the loss. Then it would be taxable. This includes insurance settlements on car accidents and burning down a home.
Lawsuits as a result of physical injury, are exempt. Pain and suffering from a physical injury are usually exempt.
Lawsuits for lost wages as a result of improper employment termination are taxable. Sexual Harrassment lawsuits are taxable. Pain and suffering as a result of non-physical injuries are usually taxable, such as defamation of character suits.
Further, in a mixed lawsuit, you may have a mixed result.
2006-10-24 13:42:08 · answer #1 · answered by tax_black_belt 2 · 0⤊ 0⤋
If you are just getting payment for your injuries then no. If they are paying you for lost wages then I believe you'll have to claim that portion of your settlement as additional income at the end of the year. You may want to ask your attorney how that works.
2006-10-23 08:37:54 · answer #2 · answered by fiestyredhead 6 · 0⤊ 0⤋
It depends on what the settlement is. For recovered expenses; no; for gain over outlay; yes.
2006-10-23 10:12:15 · answer #3 · answered by acmeraven 7 · 0⤊ 0⤋
Generally, pain and suffering or to replace property, no.
For lost wages, yes.
2006-10-23 08:29:22 · answer #4 · answered by SPLATT 7 · 1⤊ 0⤋