2007-10-11 11:00:20 · 4 answers · asked by Math Whiz 1 in Business & Finance ➔ Taxes ➔ United States
I'm only answering to back up the two answers already listed. They're both right. Just giving you a little confirmation. My husband-at-the-time got a settlement for just under $100,000, and because it was considered punitive, it was fully taxable. If it had been compensation for medical bills, it would not have been.
As an aside, if you have paid medical bills and used them as a deduction on your tax return, and then receiced compensation for those same bills in the lawsuit, you may actually have to claim some of that as taxable income - it's referred to as a 'recapture' of a prior-year deduction. Check with a tax professional experienced in this field if you have questions. You should not be charged to have someone listen to your situation and tell you whether or not you have to do a recapture.
2007-10-15 03:32:32 · answer #1 · answered by Katie Short, Atheati Princess 6 · 0⤊ 0⤋
Besides the post above. Attorneys fees you pay are only deductible as a Tier 2 miscellaneous deduction with a 2% exclusion. Some suit winners have found themselves in an Alternative Minimum Tax situation with suit proceeds.
2007-10-12 07:38:27 · answer #2 · answered by Anonymous · 1⤊ 0⤋
The portion that compensates you for your injuries is not taxable. If any portion is earmarked for lost wages, interest, or punitive damages those portions are fully taxable as ordinary income.
2007-10-11 13:05:27 · answer #3 · answered by Bostonian In MO 7 · 1⤊ 0⤋
i imagine this has been run by using the ultimate courtroom lower than a attractiveness "MURPHY" (do not carry me to the call) and it changed into determined that lower than regulation as at present written that actual purely changed into non-taxable. psychological affliction changed into not actual so it changed into taxable.
2016-10-09 01:21:51 · answer #4 · answered by Anonymous · 0⤊ 0⤋