Are Legal Settlements Taxable in California? What You Should Know
Legal settlements can be helpful after a dispute, but there are a lot of people who get confused about their tax implications. These tax implications vary between states. Residents of the Golden State may want to know whether settlements are taxable in California. Under IRC 61, all settlement income is taxable unless it is specifically exempted by another section code, according to IRS.gov. Certain facts and circumstances must be looked at for each settlement payment to figure out what the money was used for, since not all settlement payments are tax-free.