Tax implications - Settlement - Canadian Company
A US Citizen (Individual - no company) sued in Cananda & won a $200,000 settlement from a Canadian company. The $200k settlement will be deposited into the Canadian lawyer's escrow account. To the monies into the US Citizens New York bank account, does the US citizen have to pay taxes on the $200K?
If yes, what options are available so the US citizen doesn't pay taxes on the 200K settlement?
The case is not due to robbery or embezlment.
Thank You.
1 Answer from Attorneys
Re: Tax implications - Settlement - Canadian Company
If the settlement is the result of a claim which has the characteristics of taxable income, then the receipt of the payment is reportable as taxable income for federal income tax purposes. Payment for most claims, except those resulting from physical injury, constitute taxable income.
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