Settlement Money
we filed a lawsuit at the end of 2023 for damages incurred and costs to repair in 2023 and 2024. We received settlement amount less than total damages cost to repair. How do we file this correctly on our taxes? Example: damages cost to repair plus attorney fees equal $200,000. Settlement money received in 2024 equals $100,000.
Answers
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Thank you for joining our community, MortMoira.
More information would be needed to give you a definite answer. Information such as what asset was damaged and if the incurred losses happened in certain areas for casualty losses to be claimed. Here is a website that may give more information or generate more questions: IRS guidelines for settlements.
Let us know if you have further questions
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the damages were to our home/ primary residence. The seller and listing real estate agent were sued for providing false disclosure forms during the sale, hiding issues that led to the damages. State: Ohio
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Thank you for this reply and information asked.
This appears to have more information attached then we can provide support for on FreeTaxUSA. The best way to move forward would be to call a local CPA regarding the tax implications and method of reporting on your tax return. We can provide advice that Casualty losses from physical damages can only be claimed in Federally Declared Disaster Areas. The local CPA would have more information on how to claim the loss and settlement income since there is fraud and other issues happening to cause the lawsuit.
