Legal Question in Tax Law in Massachusetts

Re: Settlementtaxes

Individual taxpayors are cash basis; you pay on what you receive when you receive it (even if it's just a live check, that's cash). The simple answer is YES.

BUT some settlements aren't taxable. It depends on the nature of the claims being settled. Tell me more and I'll tell you more! Write to me at [email protected] and describe what the original claims were and how the settlement funds you've been paid are labelled.

Congratulations, by the way; you must have a half-decent case at least and you probably have a good tort lawyer working for you already. If you do, have you asked his or her permission to get advice elsewhere on the tax liability for what you've received? Let me know about that, too, please, when (if) you write.

Re: Settlementtaxes

The IRS taxes all settlements except those representing recovery for personal injuries.