I am not going into detail, however I do know I have won a law suit and would like to know do I have to pay taxes on it? The law suit is for $60,000.00
2006-12-22 21:37:21 · 3 answers · asked by Chhaya05 4 in Business & Finance ➔ Taxes ➔ United States
I've heard different things regarding this. The latest would is that the entire award is taxable in the year that you receive it. Also, the attorney's fees should be deductable as an itemized expense. Generally, you can take deductions for any reason used to make or protect your income.
However, talk to your attorney and have him give you detailed instructions, in writing, of how to account for taxes for your lawsuit. The attorney is probably getting between 33% - 40% of the total award. At least he can tell you haw to report the tax consequenses.
2006-12-23 00:12:51 · answer #1 · answered by Steve 6 · 0⤊ 0⤋
It will vary according to what was awarded. Compensation or replacement for lost items is not taxable.
Your best bet is to work with your attorney or tax consultant to get the exact details.
In my state the amount the attorney can get in contingency fees is capped. They can charge actual expenses and up to 1/3rd of the amount left after that point.
2006-12-23 10:32:03 · answer #2 · answered by Aggie80 5 · 1⤊ 0⤋
Damage awards are income and taxable, however, I believe there is an exception for awards for pain and suffering.
Worse news, if you are awarded attorney's fees and costs in addition to your damage award, you may have to pay tax on that as well. Speak to your attorney.
2006-12-23 05:49:41 · answer #3 · answered by Buzzy 1 · 0⤊ 0⤋