Taxation of EEOC Settlement

Tjspahr1
Tjspahr1 Member Posts: 1 Newcomer
in Filing my taxes

I received a settlement from a Federal Agency where I was employed, which settled several pending EEOC cases against the agency. I'm assuming that the settlement is taxable, and that I will receive a 1099-MISC for tax year 2025.

My attorney's were not part of the settlement. My understanding is that attorney's fees not reimbursed as part of the settlement, but paid by me to obtain the settlement, are tax deductible.

Can anyone confirm the deductibility of these fees, and point me to the portion of the code that supports this?

Thanks!

Answers

  • KristineS
    KristineS FreeTaxUSA Agent Posts: 250

    Hi Tjspahr1,

    We often refer our customers to both IRS Publication 4345, Settlements—Taxability, as well as IRS Publication 525, Taxable and Nontaxable Income. See page 33 of 44 in the PDF version of Publication 525 here:

    "You may be able to deduct attorney fees and court costs paid to recover a judgment or settlement for a claim of unlawful discrimination under various provisions of federal, state, and local law listed in section 62(e), a claim against the U.S. Government, or a claim under section 1862(b)(3)(A) of the Social
    Security Act."

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