Do I have to pay tax on a lump sum payment for cancellation of employment?
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| Yes. The lump sum payment is taxable income in the
tax year you receive it and must be
reported with your other salary and wages on your tax return. This is true even if the payment was received
(by suit or agreement) as settlement under the Age Discrimination and Employment Act. |
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Related tax information
about a lump sum payment |
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Legal Fees
Are back pay awards taxable?
Are damages received for emotional distress
taxable?
Are legal settlements or court awards
taxable?
Income Related Questions and Answers |
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IRS publications about a lump sum payment:
For further tax information about a lump sum payment see
IRS Publication 525, Taxable
and Nontaxable Income for more details. Also see
IRS Publication 17, Your Federal
Income Tax. |
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Ask Julian Block your IRS and tax questions! |
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If you can't find the answer to your IRS or tax question in our
web you can call former IRS Special Agent and one of the country's foremost tax attorneys, nationally syndicated columnist ("The Tax
Adviser") Julian Block. Julian is also the tax Editor of Mutual Funds Magazine, America's premier investment magazine. To
call Julian for a tax consultation click
here. |
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