Does a person have to pay tax on a law suite settlement from eeoc?

It is possible to have some taxable income from any settlement from any source if you receive a 1099-MISC or even possibly a W-2 form for any of the amount you will know that you will have some taxable income that you will have to report on your 1040 income tax return.

You will also be able to deduct some of the attorney fees using the schedule A itemized deduction up to the amount of taxable income that you have to report on your 1040 income tax return.

Go to the IRS.gov website and use the search box for PUBLICATION 525 Taxable and Nontaxable Income

Court awards and damages. To determine if settlement amounts you receive by compromise or judgment must be included in your income, you must consider the item that the settlement replaces. The character of the income as ordinary income or capital gain depends on the nature of the underlying claim. Include the following as ordinary income.

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