Are recoveries based on wrongful termination taxed?

How is Income from Direct Internet Sales Taxed?
Are recoveries based on discrimination taxed?
March 21, 2014
Structured settlements different than lump sum for injury?
March 21, 2014
Show all

Are recoveries based on wrongful termination taxed?

Old book in library with judge gavel on open law textbook in court archive text collection study room for copyrights day and international legal rights concept

Discrimination based claims can often be pursued as wrongful termination claims as well. Although repackaged, the tax treatment is still the same. Recoveries based on wrongful termination claims are generally not excludable even when employees have grounds to argue that some of their recovery is for personal physical injuries or physical sickness. At a minimum, to overcome this presumption there must be language that suggests recovery was on account of physical injury or physical sickness.