Settlement - Legal Fees

[JMos]

What is the name of your state?What is the name of your state? PA
I've filed suit with the PHRC/EEOC for discrimination based on gender and age. If I agree to settle before the fact-finding hearing, can I state I want $X plus the respondent has to pay my legal fees directly to the attorney?

Either way, are the fees I have to pay my attorney taxable income to me?

Can anyone advise regarding current law and tax matters?

 

[cbg]

You can ask for anything you want. Doesn't mean you'll get it.

I'll defer to someone else on the tax issues.

 

[pattytx]

I don't have my trusty dusty Payroll Bible with me at home. I'll try to post back tomorrow from work. I may need more information from you, so stand by.

 

[pattytx]

Well, there seems to be some ambiguity about whether or not the IRS considers such settlements "back pay"-type payments and, as such, taxable. It may end up depending upon how the settlement is characterized, e.g. XXX for back wages, YYY for punitive damages, ZZZ for attorney and court costs.

Relative to the attorney's fees, I'm assuming your attorney is working on contingency. To the best of my knowledge, the gross settlement is what you have to pay taxes on (if at all), not the net proceeds.

It would be a good idea to post this in the Tax Law Forum. Or just see your personal tax advisor, or get one, especially if you think you're going to win and the settlement may be substantial.

 

[JMos]

Original Poster - to PattiTX

THANK YOU VERY MUCH FOR RESPONDING!!
My attorney IS working on contingency (33%) and I'm quite anxious to be prepared to discuss settlement (minimum) in an up-coming meeting.

I WILL post this on the tax forum as well, to see what the experts there have to say!

Thanks again!!