Have Tax Questions? Ask a Tax Expert for Answers ASAP
Hi and welcome to our site!You must report the full amount you received and may deduct the full amount of your legal expenses (including attorneys fees).
nice!! what kind of deduction am i looking at ? what is my new AGI after normal deductions and attorney fees of 15k
There are special rules for deduction for costs involved in unlawful discrimination suits (including settlements). Generally - you can claim this deduction as an adjustment to income on Form 1040, line 36. So your AGI would be 20k+30k-15k=35k.
tax on 35k would be about 5k$
Let me estimate - please stay with me...
thank you fo all your help much appreciated
Assuming - you are single - standard deduction - no other deductions or credits - with your income level - your estimated federal income tax ~$3300California income tax is extra ~$700
thank u very much
Please be aware that deduction for legal costs on Form 1040, line 36 - as an adjustment to AGI is allowed ONLY for unlawful discrimination suits (including settlements) - so you need to be sure that your settlement qualifies as a claim of unlawful discrimination under various provisions of federal, state, and local law.
Please be sure to rate my work accordingly - so I would be credited.My goal is to provide EXCELLENT service.You are welcome back for all your tax related questions.