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Are recoveries based on wrongful termination taxed?

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.