I am to receive 2 checks in a discrimination settlement case. One is for pain and suffering. No tax will be deducted and the check will be supported by form 1099.. I say the second check for lost wages should be treated like a Norman payroll check and taxes withheld accordingly. Employer says they must take a percentage which results in a deduction $5287.68 more than a normal payroll deduction. What is correct?
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Unfortunately, settlement proceeds for punitive damages are taxable, as are awards for employment discrimination. Lost wages are subject only to normal withholding of Federal taxes, Social Security, and Medicare.
For more info, see: IRS Settlements Brochure
Unfortunately, settlement proceeds for punitive damages are taxable, as are awards for employment discrimination. Lost wages are subject only to normal withholding of Federal taxes, Social Security, and Medicare.
For more info, see: IRS Settlements Brochure
I was assessed Self Employment taxes on a settlement for Defamation. Why is this considered income subject to the SE tax? Why did Turbo Tax not point that out when I filed?
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