Already won settlement... Tax?

[SBright33]

What is the name of your state? CA

Already won unlawful termination settlement before court. Check is in the mail $200K. Funds in my lawyers account. I worked a lot this year. Do not plan to have a regular job next year. Damages not specified in settlement agreement. Loss of work, emotional, reputation.

How can I minimize the tax I pay on this settlement? Trust fund? Annuity? Can I collect a little bit each year and be taxed on that amount only? Please ask any questions that you think will help us here. Already filled out 1099? reporting this income to IRS. The full amount. Should I wait for advice before I cash the check? Wait until next year to do it?

Thanks in advance for your help,
Steve

 

[abezon]

The money is probably taxable. Call your lawyer to double check. If the money is taxable, you have to report all the income when you have a right to receive the money -- 2003 if the check is really in the mail. After paying taxes once, you only pay taxes on what the money earns, regardless of whether you withdraw it piece by piece or all at once.