Cash Settlements and Income Tax
I'm about to receive a cash settlement of about 30G. I was advised that recently in NY settlements are now considered taxable income. Is this true, and if it is, about how much will I have to pay?
2 Answers from Attorneys
Re: Cash Settlements and Income Tax
Settlements are not necessarily taxable income. It depends on the nature of the claim. Generally, if the amount in dispute had been paid without a lawsuit and the collection of the money would have been taxable income, then the collection of the settlment is taxable income.
What is the nature of your claim; define it, and that will give you your answer.
Re: Cash Settlements and Income Tax
Taxability derpends upon the nature of your claim. If in any way the claim was for lost wages or their equivalent the settlement is taxable as ordinary income, added to all your other taxable income and taxed at the rate payable on your total income less deductions.
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