What tax concerns should payors be aware of?
March 21, 2014
Is a settlement or damages taxable to recipient litigant?
March 21, 2014
Show all

Is a settlement taxable to the recipient attorney?

All businesses except partnerships must file an annual income tax return and must pay tax on income as it is earned or received during the year; this includes attorneys entitled to a portion of any damages award or settlement amount. If you are a Sole proprietor then you may be liable for: 1) income tax; 2) self-employment tax; 3) estimated tax; 4) employment taxes; and 5) excise taxes. If you are a partnership then you may be liable for: 1) annual return of income; 2) employment taxes; and 3) excise taxes. If you are a partner in a partnership (individual) then you may be liable for: 1) income tax; 2) self-employment tax; and 3) estimated tax. If you are a corporation or S corporation then you may be liable for: 1) income tax; 2) estimated tax; 3) employment taxes; and 4) excise taxes. If you are a S corporation shareholder then you may be liable for: 1) income tax; and 2) estimated tax.