Labor/Employment,
Civil Litigation,
Tax
Jan. 12, 2018
Tax bill affects employment litigation settlements
The Tax Cut and Jobs Act, signed by President Donald Trump last month, makes a number of changes that can affect employment litigation settlements.
President Donald Trump signs a sweeping tax bill in the Oval Office of the White House, in Washington, Dec. 22, 2017. (New York Times News Service)
Any settlement of employment litigation should take account of taxes. They affect all parties including the lawyers.
The basics are well known. Plaintiffs generally must report all payments as taxable income, including what they pay their lawyers, though they may be able to deduct legal fees. Defendants generally get a deduction for their payments. Payments to lawyers are taxable income.
The Tax C...
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