Discussion:Taxable?
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| 10 May 2006 | |
| hello, i have a client who received a 1099-misc. the form was a result of an anti discrimination suit, filed by the eeoc, in response to a violation of the americans with disabilities act. is this taxable income? | |
| 11 May 2006 | |
| Yes. Since the cause of action is not personal physical injury, the total amount of the settlement or award is included in gross income. However, he may be able to deduct the legal fees as an above the line deduction. | |
| 11 May 2006 | |
| Riley2 - would you elaborate on what would qualify the legal fees as an above the line deduction? | |
| 11 May 2006 | |
| Quoting from pub 17:
"You may be able to deduct attorney fees and court costs psid to recover a juddgement for a claim of unlawful discrimination . You claim that deduction as adjustment to income on Form 1040, line 36" | |
| 11 May 2006 | |
| JRE, if the claim or cause of action falls within certain classifications of actions, including unlawful discrimination claims, certain claims against the United States Government, and certain claims against certain secondary Medicare payers, the legal fees and costs are deductible above the line (for fees and costs paid after 10/22/04 with respect to settlements or judgments occurring after 10/22/04). See Sec. 62(a)(20).
The list of types of claims qualifying as “unlawful discrimination” is quite long, and includes violations of the ADA. Sec. 62(e)(16). Also, see Sec. 62(e)(17) and 62(e)(18). | |
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