I live in Texas and got a check for over $400k , I would like to cash in the bank but before I do, I want to know if it is a better idea to wait for the new year or not? The check void in February of 2026 so I have time to wait. I asked my lawyers if they were going to tax my settlement or if the government will and they told me no, however after they gave me the check they made me sign a paper saying they are not a tax lawyer and if I had any questions to find a tax lawyer to help me. So I am completely loss if they will tax me, if so by how much? And is there a way to not get tax so much? I was hoping to pay off my car and get it fixed as well as finish paying my medical bills and pay off my student debt and maybe buy a house or at least put a down payment and help out my parents who took me in after my car accident. I currently not working because of the car accident that happened in 2023, I lost my job at the end of 2023 because of the accident. Therefore I have no income from this year, so would my check count as my income and get taxed from it? If anyone can help me I would really appreciate it
Large check from lawsuit, when should cash it, for tax reasons. Tx
byu/breeecat intax
Posted by breeecat
5 Comments
You effectively received it already, it’s income when you got the check. Enjoy your money!
Depends on the lawsuit but they are usually taxable. It’s also likely taxable in the year the check was issued, not when it was cashed. Individuals report income on a cash basis, you received the check this year, hence is should be claimed as income this year.
We need to know what the lawsuit was for to determine if it is taxable
You waiting until next year to cash is irrelevant. When you receive the check is the year it would be taxable (if it is)
It is $400,000. Don’t you think it would be wise to hire a CPA for a
Consult rather than ask unknown strangers on social media?
It doesn’t matter when you deposit the check. The income is considered received when you were awarded the money. However, personal injury settlements are generally not taxable, so if the settlement stems from your car accident then it may be a moot point.
If it’s from a personal injury settlement they normally don’t tax those.