Am I going to have to pay some money back to the IRS because of the settlement checks I’ve received? I’ve read that it would be considered taxable income but I don’t exactly understand what that means. Will my tax return be less than usual because of this settlement check?
In: Other
It means that when you file your income tax for 2024 in the section of “other income” you would list the amount of the class action settlement. If you are in the 22% tax bracket, then your income tax refund will be reduced by 22% of the value of the settlement (as you owe tax on the settlement).
Class action settlement checks are usually taxable. That means the IRS might count them as income, which could affect your tax return. It’s a good idea to consult a tax pro for specifics.
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