How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Gerald, Esq Your Own Question
Gerald, Esq
Gerald, Esq, Lawyer
Category: Legal
Satisfied Customers: 2877
Experience:  30 years of experience
77476456
Type Your Legal Question Here...
Gerald, Esq is online now
A new question is answered every 9 seconds

I settled a lawsuit against a hospital termination and

Customer Question

I settled a lawsuit against a hospital for wrongful termination and settled at mediation for 375,000. They stated in the settlement agreement that they would be sending me a 1099. My attorney however told me I would not be paying taxes in that personal injury settlement however I got a 1099 and will owe 66,000. Had my attorney told me that I definitely would not have settled. Secondly the settlement agreement states that they were issuing my attorney a check for $160,000 " to cover attorney's fees and expenses incurred by employee in seeking legal advice". Then why did my attorney charge me an additional $25,000 in retainer and fees? Seems like he got paid twice. How can I resolve this and can I sue my attorney?
Submitted: 8 months ago.
Category: Legal
Expert:  Gerald, Esq replied 8 months ago.

Hello,

Thank you for using Just Answer. I want to provide you the best service I can. Please feel free to ask any follow up questions you have.

I am an attorney with 30 years of experience; I hope to provide you information that will help you in resolving your question.

The fact that you were issued a 1099 does NOT determine whether you have to pay income taxes on the settlement. You stated two things in your post that have me a little confused. Perhaps you can help me a little:

1) You state the settlement was for "Wrongful Termination" and

2) You state that it was for a "Personal injury."

Compensation for physical and related psychological injuries (that is psychological trauma connected to the physical injury) are not taxable, even if you received a 1099. You will need to exclude that amount from income and demonstrate it was compensation for personal injury.

Compensation for lost wages, back pay, future pay are economic damages and are taxable. If the underlying cause of action was contractual in nature you must pay taxes.

See this article for more detail:

http://www.nolo.com/legal-encyclopedia/is-your-personal-injury-settlement-taxable.html

As for suing your attorney, in regard to fee disputes, Florida has a Fee Arbitration program that is faster, simpler, and less expensive (in fact the client often pays nothing for the arbitration process). Participation by the attorney is mandatory and binding. So you may wish to consider that process. Here is information on it:

https://www.floridabar.org/TFB/TFBResources.nsf/Attachments/692B2F6979DED1368525713A0068322F/$FILE/FeeArb-App&Instructions.pdf?OpenElement

http://www.floridabar.org/tfb/TFBConsum.nsf/0a92a6dc28e76ae58525700a005d0d53/c0bd2f20e7efae2685256b2f006c616d?OpenDocument

If you wish to pursue damages for negligence in regard to the attorney's failure to advise you regarding the tax consequences, or negligently advising you, those are allegations to support a lawsuit. Of course there are the expenses in time, energy and resources to consider. The litigation process is more complicated, expensive, and time consuming than is the arbitration process.

I hope the information I provide is useful to you. I want you to be comfortable and satisfied with my attempt to assist you. Please, if you have ANY follow up questions, feel free to ask. Please note that I am generally unavailable Friday evening through Sunday.

Please do not forget to give me a positive rating. It adds nothing to your costs but it helps me greatly. Thank you.

If you are dissatisfied with my response PLEASE let me know before giving me a negative review so that I may try to be of better assistance. Or if you prefer, let me know and I can “Opt Out” and your question can be re-posted without additional cost to you. I will be fair to you and only ask the same from you.

Good luck.

Please note: Information is educational and not given as legal advice. Only your local attorney can give legal advice. I can't establish or accept an attorney-client relationship with you. All posts are available for public viewing.

Kind regards,

Gerald

Related Legal Questions