- Mark as New
- Bookmark
- Subscribe
- Subscribe to RSS Feed
- Permalink
- Report Inappropriate Content
Get your taxes done using TurboTax
Whether or not this amount is taxable depends on a number of factors, but the primary one is, What is the compensation meant to replace?
Some cases are very clear, such as a lawsuit to get back wages. That is taxable because the proceeds are meant to replace wages, which are taxable.
In general, class action lawsuits are meant to replace a value you did not receive, or return an amount that you were overcharged.
The IRS codes actually state that lawsuit proceeds are taxable unless there is a specific exception based on the facts and circumstances.
Click here to learn more about this topic.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
**Mark the post that answers your question by clicking on "Mark as Best Answer"
March 7, 2022
4:25 PM