I received a employment settlement from my ex employer. I first filed a wc claim with my employer they denied it. The Ama dr agreed in my favor and recommended reasonable accmmodation. I filed paper for reasonable accomm. My employer settle my WC case in compromise with my resignation (I was told they did not have to accommodate) also in the comprosmise I stated that a charge with eeoc will be persude. I did file a claim with EEoc that I was not given accommodation to return to work they also found in my favor
The ex employer settled with a binding agreement in reconsiliation. To drop my charges and waive rights to sue in future regarding that case. Question is the settlement in assoc with WC claim or stand alone discricminations claim what is the tax implications. I have been different answer by IRS from do it like self employment tax to the IRs veiws settlments as emotional distress settlement when there are no allocations or tax withheld.

It appears that in your case the income is taxable and you will report it on schedule C or C-EZ and pay SE tax at 15.3%.

Settlement for injury is not taxable. If it is for lost wages or interest, it is taxable. Attorneys fees are deductible if they are an attempt to get you taxable income otherwise they are not deductible. You can usually deduct legal expenses that you pay or incur to produce or collect taxable income or in connection with the determination, collection, or refund of any tax. Settlement taxes Your U.S. Tax Return: The U.S. Income Tax Topics 1