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Taxation of Severance Pay and Employment Law Settlements

By Chris Royer

Contents

• Introduction
• If I settle my employment discrimination case, do I have to pay taxes?
• If (almost) everything is taxable, can I at least reduce the amount of tax?
• What are options for allocating severance pay or settlement proceeds?
• What if I am a high wage earner? Does the analysis change?
• What if an insurance company, and not my employer, pays most of the settlement?
• How should I handle payment of my Attorneys' Fees?
• The employer sent me a 1099 that included everything, including what my attorney's fee. Do I have to pay taxes on that?
• My employer is willing to agree to my proposed allocations, but it wants me to
• Where can I find more information?
• Footnotes