Have Tax Questions? Ask a Tax Expert for Answers ASAP
Thanks for asking your question! I'm sorry to hear about your tax issue and I'm going to try my best to help you understand or resolve it.
What is the nature of the claim? Whether or not you are taxed depends on the reason for the settlement.
It's a discrimination lawsuit that cost me future employment, but the entity that settled was not the employer
You will have to find out from your attorney how the settlement is characterized.
If it's for losses you incurred, then the settlement would not be taxable.
but if it's for payroll then it is
Pain and suffering settlements are not taxable
it's considered mutual consideration
that told me I needed to check with a tax professional
so I am checking with you
Yes, I would say it's taxable. Physical injury settlements are not taxable, and loss of value settlements are not taxable. It does not sound like it's either of this
You can read the IRS publication outlining tax treatment of settlements here:
so I should be getting a 1099 from them?
Yes, since the amount is greater than $600
If you don't get a 1099 you should still claim it
will I get a 1099 for the totally of $2500 or just the portion I received from my attorney?
The full $2500 and you can deduct the legal fees if you itemize your deductions
by what date are they required to mail the 1099 to me, so I know when to file my taxes?
They should have it to you by January 31, but even if you don't get it you should still include the income on your taxes
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