<BLOCKQUOTE><font size="1" face="Verdana, Arial">quote:</font><HR>Originally posted by k1ngdog:
I'm expecting a large settlement in court case that is soon to close. The amount is substantial, and my lawyer will naturally receive a large $ amount on a contingency basis. My question is: am I taxed on his cut of the pie, which I never see, or does he? Thanks in advance.<HR></BLOCKQUOTE>
My response:
He is the only one taxed "on his cut of the pie" - not you. If your "cut of the pie" is for personal injury, then you won't be taxed. If any of your "cut of the pie" is based upon "lost wages or lost earning capacity", then you will be taxed on that portion by the IRS and if applicable, your State.
Your attorney will eventually send you your "net" settlement proceeds on an "Attorney Trust Account" check. The most you'll ever see of the "Gross" settlement check is when he/she calls you into the office to sign it. Then, that check will be deposited, by law, into the Attorney Trust Account checking account. After it clears, you'll receive your share.
Then, it's between you and the IRS to inform the IRS at taxtime, whether any amount of that check is for wage reimbursement.
IAAL
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