2007-06-26 23:54:13 · 2 answers · asked by Anonymous in Business & Finance ➔ Taxes ➔ United States
That depends upon what the settlement is for. Settlements for physical injury or illness are not taxed. Anything for punitive damages, lost wages, or interest is fully taxable. Settlements that simply make you whole again, for example recovery of damages to your property, etc. are not taxed either.
The tax on any taxable settlement will depend upon your total taxable income so without all of your personal financial and tax information it's not possible to say.
2007-06-27 00:06:02 · answer #1 · answered by Bostonian In MO 7 · 1⤊ 0⤋
Need a little more details. What is the nature of your lawsuit? Are you being reimbursed for lost wages-medical expenses-personal injury-any part punitive?
Your attorney should be able to tell you what,if any,is taxable.
A little FYI-if the settlement is taxable,attorney fees are deductible on the Sch.A,Misc.subject to 2%. If not taxable,you can't deduct.
2007-06-27 07:05:58 · answer #2 · answered by Anonymous · 1⤊ 0⤋