Ask Experts Questions for FREE Help !
Ask
    nowornever's Avatar
    nowornever Posts: 1, Reputation: 1
    New Member
    		  
    #1

    Aug 1, 2009, 10:06 AM
    Lump-Sum Settlement Payment - check distribution for tax purposes
    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.
    excon's Avatar
    excon Posts: 21,482, Reputation: 2992
    Uber Member
    		  
    #2

    Aug 1, 2009, 10:38 AM

    Hello no:

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

    excon
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #3

    Aug 3, 2009, 02:10 PM
    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.
Not your question? Ask your question View similar questions
 

Question Tools Search this Question
Search this Question:

Advanced Search

Add your answer here.


Check out some similar questions!

Payment for civil court settlement [ 5 Answers ]

I am the plaintiff in a civil case with a small municipality, (defendant). The judge is about to rule in my favor, (plaintiff). The defendant (small municipality) is offering a settlement for half of the amount in 6 quarterly payments. 1) I am concerned I will not get paid or the payments will...

For fed tax purposes, did I receive a "distribution" if I borrowed against my 401k? [ 2 Answers ]

I am at this section of filing my federal incom tax return and don't know how to answer: Retirement Plan Income The following types of retirement income are usually reported on Form 1099-R: IRAs 401(k)s Annuities Military pensions Other pension plans

Can't make settlement payment. [ 4 Answers ]

Starting around October of last year I ran into some major money problems and fell behind on everything. At first I did the wrong thing and hid from the creditors because I was broke and didn't know what to do. At the beginning of this year I got back on my feet a little and started contacting my...

QRDO - 401k distribution as part of divorce settlement [ 0 Answers ]

My ex-husband's 401k plan requires a QRDO (Qualified Domestic Relations Order). We have settled on an amount and it is part of the divorce agreement. I am told that completing a QRDO is too difficult and an attorney is needed. Considering that my ex-husband and I have agreed upon the amount, are...

View more questions Search