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Below is a list of the most common customer questions. If you can’t find an answer to your question, please don’t hesitate to reach out to us.

Do you have to pay taxes on a class action settlement check?

Class-action settlement proceeds are treated like proceeds from any other lawsuit. The IRS treats settlements for physical injury or sickness as non-taxable as long as the claimant did not receive a tax benefit by deducting the related medical expenses on previous years' tax returns.

Do you pay taxes on a class action settlement?

Class-action settlement proceeds are treated like proceeds from any other lawsuit. The IRS treats settlements for physical injury or sickness as non-taxable as long as the claimant did not receive a tax benefit by deducting the related medical expenses on previous years' tax returns.

How do I report income from a class action settlement?

Interest earned on a lawsuit settlement is taxable income and should be entered as a Form 1099-INT. Punitive damages are taxable and should be reported as Other Income on line 21 of Form 1040, even if the punitive damages were received in a settlement for personal physical injuries or physical sickness.

Do I have to report settlement money?

If you receive a settlement for personal physical injuries or physical sickness and did not take an itemized deduction for medical expenses related to the injury or sickness in prior years, the full amount is non-taxable. The tax benefit amount should be reported as Other Income on line 21 of Form 1040.

How do you pay taxes on settlements?

Taxes on Personal Injury Awards If you sue someone for causing you personal physical injury or physical sickness, any damages or settlement you receive to compensate you for your medical expenses, lost wages, and pain, suffering, and emotional distress is not included in income. The money you receive isn't taxed.

Is my lawsuit settlement taxable?

If you receive money from a lawsuit judgment or settlement, you may have to pay taxes on that money. After you collect a settlement, the IRS typically regards that money as income, and taxes it accordingly. However, every rule has exceptions. The IRS does not tax award settlements for personal injury cases.

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