Question:

Do i have to pay tax on class action lawsuit settlement? ?

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The settlement was for being laid off and our lawyers claimed

that lay offs were illegal at the time.,

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  1. Only settlements for physical injury or illness are tax exempt.  Yours will be fully taxable as ordinary income.


  2. Fully taxable.  *Worse* that's before the lawyer fees.  You might be able to claim the lawyer's fees on schedule A.
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