Are class action settlements subject to income tax?
Answer:
Any compensation greater than $600 must be reported to the IRS.
it depends on how the attorney righ the settlement and what the settlement was for. If it replaced lost wages is subject to taxation as ordinary income. If it is for pain and suffering it is not taxed....but trust me it gets much more complicated. If you want to share more info please email me. witchtwo_2000@yahoo.com
It depends upon whether the lawsuit involved lost income. If you are talking about securities then it depends upon if you still own them. If you do the settlement just reduces your cost basis and is not taxable. If you do not own them anymore then the proceeds are long term gain - assuming you sold them as a long term asset.
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