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Retirement tax questions
In general, litigation settlement proceeds stem from income that would have been taxable if you had not had to sue for it. So, in essence, you are receiving income that you should have received anyway, and if the income would have been taxable if not associated with the lawsuit, it will be taxable when you receive it because of the lawsuit.
Without knowing more about what the lawsuit was for, I cannot be more specific.
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March 31, 2021
1:21 PM