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01-06-2007, 02:45 PM
| | Junior Member | | Join Date: Jan 2007
Posts: 3
| | | taxes on lawsuit
What is the name of your state? new jersey
I got a small out of court settlement of $21,000. I had to pay lawyer fees from this also. I wanted to know if there was a law that came out about two years ago about paying taxes on a lawsuit? I paid 4,000 in attorney fees so when I pay IRS I will be taxed on the 21,000 and not the 17,000.
thanks |
01-06-2007, 03:18 PM
| | Senior Member | | Join Date: Aug 2002 Location: Washington
Posts: 3,484
| | | As with most tax questions, the answer is, "it depends." In your case, it depends on what the underlying suit was for. Details please.
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01-06-2007, 05:08 PM
| | Junior Member | | Join Date: Jan 2007
Posts: 3
| | | taxes on lawsuit
the suit was given to me ceause the city was liable for me getting medical attention for carpal tunnel sydrome. I was out of work for almost three months and the city wouldn't give me a release letter so I could see a doctor on my own. nor would they say they are agreeing to pay me for capal tunnel. so, I was stuck in the middle. I couldn't see a doctor because non would see me after I see a workman's compensation so I got a lawyer to get me a release note and the city, i was employed by the city, settle to pay me 21,000. which i only asked for my back pay but i was happy  that's why i was if there was a new law concerning paying lawyers and and taxes on moniees in NJ. I hope you understood what I just wrote.  |
01-07-2007, 06:13 AM
| | Senior Member | | Join Date: May 2004
Posts: 41,296
| | Quote:
Originally Posted by playfun  the suit was given to me ceause the city was liable for me getting medical attention for carpal tunnel sydrome. I was out of work for almost three months and the city wouldn't give me a release letter so I could see a doctor on my own. nor would they say they are agreeing to pay me for capal tunnel. so, I was stuck in the middle. I couldn't see a doctor because non would see me after I see a workman's compensation so I got a lawyer to get me a release note and the city, i was employed by the city, settle to pay me 21,000. which i only asked for my back pay but i was happy that's why i was if there was a new law concerning paying lawyers and and taxes on moniees in NJ. I hope you understood what I just wrote. | That really doesn't answer the question. Get out your paperwork from the lawsuit and tell us exactly what the money was intended to compensate you for.
If it was wages, its taxable. If its to cover medical bills, its not. If any of it is punative, its taxable....get the drift? |
01-07-2007, 09:41 AM
| | Senior Member | | Join Date: Mar 2006
Posts: 6,673
| | | From the description, I also believe you need to report the entire settlement and then take the amount paid to the attorney off that amount. It does not appear to be a civil rights-type suit.
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01-07-2007, 02:15 PM
| | Senior Member | | Join Date: Apr 2002
Posts: 9,178
| | | If you have any doubts, please consult a local CPA or tax accountant. | |
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