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Are lawsuit settlements taxable?

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J

Jan_al66

Guest
undefinedWhat is the name of your state?
I need to find out if a lawsuit settlement from a former employer is considered income and therefore taxable? I currently live in Kansas and sued a former employer in New York for sexual harrassment and wrongful termination of employment. The case did not go to court, I received a settlement. Thanks.
 


Snipes5

Senior Member
It depends on how the settlement reads. It will also depend on how it is reported to you at the end of the year. Any amounts for "lost wages" are taxable. Other amounts may or may not be. Bring your court paperwork to a tax professional for a determination on your specific case, as each is different.

Snipes
 

abezon

Senior Member
Damages for physical injury & sickness are not taxable. Emotional distress is considered "physical injury" to the extent you pay for medical treatment/counseling. In other words, the settlement is probably taxable.
 

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