I am state employee that was subjected to an external investigation directly resulting from work place actions. State law requires employees in this situation to use private counsel and then apply for reimbursement if no wrong doing was found. Having done this, I submitted all my proof of services and payments to the state and received a partial reimbursement. In receiving the reimbursement, my understanding is that the state viewed this the same as a reimbursement for mileage, lodging, etc.
Am I required to pay taxes on this reimbursement even though I used my post-tax salary to pay it in the first place only because the state required me to?
