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this post was submitted on 25 May 2024
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Wait, that doesn’t count as income and get taxed does it? I always assumed a court order payment wouldn’t be taxed because it’s only being awarded to make you “whole”. You don’t pay taxes on the money you get from your insurance when your car gets totaled, why would court ordered restitution be any different?
Unfortunately that is not true. The only tax-free court imposed restitution is that of physical pain and suffering not mental anguish. There may be other small caveats like hospitalization for mental but yeah, if you get a settlement expect the govt to come looking for its cut after the lawyer takes theirs.
God we suck as a nation.
I didn’t have to pay tax on the small claims court case I won. Other cities/states might be different.
I agree it shouldn't. At the end of the day that money has already been taxed once. It should go to the person as if it was already theirs, because it's making up for something that should have been theirs.