I'm in the process of receiving a settlement payment in the amount of 27,000 from a hr settlement cases (just been laid off). The defendant, my former employer is giving my attorney this upcoming week three (3) checks, 9,000 a piece. The 1st and 2nd check for 9000 is written out solely to me , BUT now the third check for 9000, is written out to the attorney and myself and out of that check I owe him 6000. I guess he will be giving me a check from himself for 3000. Is this how it works or should I contact my attorney and tell him to tell the defendants atty to draw one check to me at 21000 and draw one solely to my attorney at 6k (doing this might hold up the checks another week, but that's ok).

I'm also wondering if I leave it "as-is", and the 9000 check is made out to me and the attorney, am I not paying taxes on whole 9000. Isn't the attorney suppose to pay taxes on his portion. Please give me your advice how the checks should be distributed.

Hello no:

The check distribution does not effect your tax liability. Your net income will. So, I wouldn't worry about it.

excon

If the settlement is deemed taxable income, then the entire $27,000 is taxable. You can deduct the $6,000 attorney's fee as an itemized deduction.