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New law may help save money when settling lawsuits

by on
in Discrimination and Harassment,Human Resources,Small Business Tax,Small Business Tax Deduction Strategies

A little-noticed piece of a new tax law allows victorious plaintiffs in discrimination cases to take a full tax deduction for their attorney's fees and court costs. Until now, for example, an employee who won or settled a bias case for $100,000 had to pay tax on the entire amount, even though he paid his lawyer a $30,000 contingency fee (and the lawyer paid tax on that $30,000, too).

Impact: Such "double taxation" often stood in the way of settlements, causing plaintiffs to insist on higher settlement amounts. So, this law should help your organization settle lawsuits for a lower amount.

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