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Dimitry K., Esq.
Dimitry K., Esq., Attorney
Category: Legal
Satisfied Customers: 41221
Experience:  Multiple jurisdictions, specialize in business/contract disputes, estate creation and administration.
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We are considering accepting a settlement - we currently have

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We are considering accepting a settlement - we currently have two cases pending - one in federal court and one in state court. The cases were filed on behalf of our minor son, who is 8, and is disabled. He was discriminated against by the school district he attends and the Office of Civil Rights found his civil rights to have been violated and the Missouri Commission on Human Rights also upheld that our son was discriminated against due to his disabilities. My husband and I were never interested in receiving money, all we wanted was for the District to provide our son with the services he needs in order to receive an appropriate education. I was also a party to the case because the District filed a false police report and had criminal charges filed against me - the judge in the case would not hear the case because he stated he did not want to open the city up to charges of malicious prosecution, which he felt he would be doing by allowing it to go to trial - even through we had to go to court two times because of continuances. The charges were dismissed with prejudice. So far we have spent over $75,000 in legal fees, the settlement is for far less than that - I don't care as long as my son receives the services he needs. This case has pretty much financially ruined us and we are concerned about having to pay taxes on any monetary settlement. Our attorney said we should check with a tax lawyer because she believes that since the case was based on discrimination and was filed on behalf of a minor that any amount awarded will not be taxable - we live in the state of Missouri. Do you know if this is true? Our attorney also stated that we may be able to write in the agreement that the money goes to her to pay for attorneys fees and that could prevent us from being taxed on it - that doesn't sound accurate to me, but I don't know anything about taxes or tax law. Any insight into this would be appreciated. If it matters in the answer, our son require medical treatment as a result of the actions of the school - he became suicidal and had to be put on anti-depressants and anti-anxiety medication.

Thank you for your question. Please permit me to assist you with your concerns.

To answer directly, any settlement that you receive based on 'pain and suffering' is generally not taxable. That is because a settlement is set to make the parties whole and the pain and suffering would therefore not be a profit. Any punitive damages or claims that are granted would be taxable since that is essentially far and above the initial award. As for what your attorney stated, it happens to be accurate--you can write the settlement in a manner that a portion is automatically designated to the attorney--since it never technically touches your assets, it does not become your asset and it bypasses any sort of a tax obligation that may exist. The attorney is not quite correct on the fact that since it is a minor's case, you aren't liable--it simply may transfer tax liability to the son. But if it was based on pain and suffering, it not taxable outright.

Please let me know if that helps. I genuinely sympathize and hope that your son is able to beat this as soon as he can. It is simply unconscionable to treat those weaker and different to such an extent.

Good luck.

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