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3 Answers

Do I have to claim settlement money on taxes?

Asked by: fgr8out 215 views YA Discussion

My husband received a settlement for wrongful prosecution. The lawsuit was meant merely to recoup the money we were forced to pay for restitution, supervision fees, and attorney fees. The results of the settlement ended up being about $ 9,000.00 dollars more than our total fees. Do we have to pay taxes on all of it or only the monies that were not a reimbursement from the wrongful prosecution? What would it be considered on the tax forms ie other income?

How others found here:

  • 1099 misc from atty so how do I claim attorney fees
  • do i claim received restitutiion tax return
  • do you claim settlements on taxes

3 Answers



  1. tro on Jan 24, 2013 Reply

    settlements that ‘restore’ to more or less the original condition are not taxable
    this appears to be the case here

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  2. Bash Limpbutt's Oozing Cyst© on Jan 24, 2013 Reply

    Since the settlement was not for physical injury or illness it’s fully taxable. You can deduct the attorney’s fees on Schedule A if you itemize.

    The portion that reflects repayment of restitution improperly paid would not be taxable, nor would the refund of the supervision fees. Be sure that your attorney or the jurisdiction that pays you breaks this all out for you in writing.

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  3. Bobbie on Jan 24, 2013 Reply

    Some of the amount can be TAXABLE and some it could also be NONTAXABLE income for the tax year the were received in just try and get the Judge or the attorney or the payer of the amounts to separate them for you before you go to far wit this matter.
    For sure if you do receive a 1099-MISC for it you know that you will have to report the amounts on your 1040 income tax return page 1 line 21 other income and some of the fees might be able to claimed on the schedule A itemized deductions of your 1040 income tax return during the 2013 tax filing season.
    Hope that you find the above enclosed information useful. 01/23/2013

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