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About John L. Tidwell
Expertise
Unemployment tax law both state and federal; determination of employer employee relationship; the usual 20 commonlaw factors for making that determination; and what makes me a liable employer.

Experience
Over 20 years of field audit experience with a state agency

Organizations
none

Publications
none

Education/Credentials
Degree in Accounting from Falls Business College

You are here: Experts > Business > Corporate Law > Tax Law (Questions About Taxes) > Taxes on a lumpsome payment

Tax Law (Questions About Taxes) - Taxes on a lumpsome payment

Expert: John L. Tidwell - 10/23/2009

Question
QUESTION: Good evening Mr. Tidwell,

I have a question. On a $10,000.00 (Ten thousand) dollar lumpsome payment, that I will be receiving a 1099 form for taxes, In AZ. How much would go to taxes? Or, how much is a good idea to put away, and not spend? I do not want to have issues when it comes time to pay the taxes.

Thanks

ANSWER: Joe:

What did you do to receive a lumpsum payment?

John

---------- FOLLOW-UP ----------

QUESTION: it was a settlement but I was reading it is taxable since it is not due to me being physically hurt it was given to me to keep them from being sued

Answer
Joe:

If the settlement was back wages then it will be taxable and the employer will be required to pay the usual federal and state taxes on their part of the settlement. However, if it was a settlement to make you "whole" from some outrages damage to you then it may not be taxable.

Without some detail as to the circumstances and the settlement, I can only make educated and experienced guesses how it should be handled.

John

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