http://www.pgpmediation.com/2008/12/05/settlement-and-taxes-must-i-pay-for-dancing/ Thu, 19 May 2011 01:21:52 +0000 http://wordpress.org/?v=2.9.2 hourly 1 http://www.pgpmediation.com/2008/12/05/settlement-and-taxes-must-i-pay-for-dancing/comment-page-1/#comment-988 TeddySnyder Mon, 16 Feb 2009 21:41:25 +0000 http://www.pgpmediation.com/?p=350#comment-988 The best way to manage taxes in these types of cases is to structure the settlement so the tax hit doesn't occur all in one year. Taking the settlement all in one year pushes the plaintiff into a higher tax bracket for all income, not just the settlement, and likely triggers the Alternative Minimum Tax. Conversely, Plaintiffs who structure their settlement can time the payment to match their anticipated needs-- and nothing is taxed until actually received. By allowing interest to compound on a tax-deferred basis, the yield is higher than could be achieved on a taxable basis on a similar investment. Plus, a structured settlement is secure. Once the structure is in place, that return is guaranteed, unaffected by fluctuations in the stock market, interest rates, or the real estate market. The best way to manage taxes in these types of cases is to structure the settlement so the tax hit doesn’t occur all in one year.
Taking the settlement all in one year pushes the plaintiff into a higher tax bracket for all income, not just the settlement, and likely triggers the Alternative Minimum Tax.
Conversely, Plaintiffs who structure their settlement can time the payment to match their anticipated needs– and nothing is taxed until actually received. By allowing interest to compound on a tax-deferred basis, the yield is higher than could be achieved on a taxable basis on a similar investment. Plus, a structured settlement is secure. Once the structure is in place, that return is guaranteed, unaffected by fluctuations in the stock market, interest rates, or the real estate market.

]]> http://www.pgpmediation.com/2008/12/05/settlement-and-taxes-must-i-pay-for-dancing/comment-page-1/#comment-827 BEWARE OF THE 1099! | PGP Mediation Tue, 23 Dec 2008 19:28:20 +0000 http://www.pgpmediation.com/?p=350#comment-827 [...]   A few weeks ago, I wrote a blog on whether settlement monies constitute taxable income under the Internal Revenue Code. By [...] [...]   A few weeks ago, I wrote a blog on whether settlement monies constitute taxable income under the Internal Revenue Code. By [...]

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