What is the law regarding class action lawsuit settlements and taxes?

Answer by  epglaw (553)

If the settlement is for physicial injury, then the settlement is not subject to Federal taxes. If it is for anything else, the money may be subject to income tax.

Answer by  xjamesdavisx (63)

Law is the lead plaintiff normally gets 60 days of the notice to decide action against a company or person in general. Defendants say their story and normally which every one is most acceptable is who will wwin the case

Answer by  tml (538)

Settlements are considered income by the IRS and state tax agencies. As a result, any award won or paid due to a settlement must be reported for annual income taxes.

Answer by  tschu (417)

It depends on what type of suit it was and how you were compensated. If you were reimbursed for money you spent for insurance premiums, tuition, etc. then it would not become income an wouldn't be taxable. Some other suits where you recieve a settlement, however, would be considered income and would be taxable.