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Is the settlement money taxable in this case?

  • 01-10-2015 10:57pm
    #1
    FullDisclosure
    Banned (with Prison Access) Posts: 6 ✭


    Lets say an employee accepts an out of court settlement from an ex employer, is that taxable or can the employee keep it all?


Comments

  • #2
    Victor
    Registered Users, Registered Users 2 Posts: 78,580 ✭✭✭✭Victor


    A solicitor or accountant should be able to advise.

    Note that 'taxing' is the phrase used when determining how much a lawyer is due, when there is a disagreement on that amount. So be careful in any settlement that you are clear what the legal costs are and whether they are being paid separately or not.

    You don't say what the settlement is for? Non-payment of wages. Injury? Defamation?

    As regards income tax, PRSI and USC, it may depend on what headings the payment comes under. Back pay, holiday pay ude, etc. would certainly be taxable.

    I don't know about compensation. Certain compensation isn't taxable. I don't know if that extends to loss of income or similar headings.


  • #3
    The_Minister
    Registered Users, Registered Users 2 Posts: 10,255 ✭✭✭✭The_Minister


    FullDisclosure wrote: »
    Lets say an employee accepts an out of court settlement from an ex employer, is that taxable or can the employee keep it all?

    The Revenue website has a guide to taxation of employment matters.

    It depends what the money was for.
    Money for unfair dismissal is, in some regards, taxable, whereas personal injury damages are not.


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