Do i have to pay taxes on a settlement?

Question

i worked for roundtable in 2006 and last month i received a letter saying the company is being sued and if i want to recieve a payment i have to fill out a form and send it in and i did that. i want to know do i have to pay taxes and if yes, where and when do i pay it?

Answer 1

Assuming this payment is for back wages it is taxable-there will probably be no W-2 issued, so it would be entered on line 21 on page one of the 1040.

Answer 2

Yes, it's income.

Only money paid for death and personal injuries is untaxed.  

You would report this as other income on your tax return.

Answer 3

Under normal circumstances (99%) of the time, legal settlements in a cival case are exempt fom all taxes.  Consult your tax man for assurance.