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Want to know if my lawsuit is taxable.

1 Answers. Asked on Aug 29th, 2017 on Taxation - Georgia
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I'm part of the VW lawsuit. I will be relieving a settlement out side of the class action. Will this settlement be taxable or not?
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Answered on Sep 06th, 2017 at 6:01 AM

Whether assets received as part of a settlement are taxable or not depends on what they are replacing. For example, if you have a suit that is based on personal injury (physical injury) and on lost wages (lost as a result of the injury), the lost wages are replacing taxable income and are taxable, while the physical injury component is not. In something like the VW settlement, the recovery may be considered a replacement of money you spent on the car and the loss in value that resulted from the VW fraud becoming public. So, it may not be taxable income to you. However, your best bet is to get a good CPA who knows how to properly report lawsuit settlement proceeds to help you prepare your income tax returns for the year you receive the settlement, and follow the CPA's advice. Best wishes to you.

This answer is being provided as general information and not as legal advice. No attorney-client relationship is created by this answer.

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