Thursday, August 18, 2011
Do I have to pay taxes on my small claims judgement payment?
The Judgment was for my security deposit from my old place of residence. The judgment breaks down like this: Security Deposit $1000.00, $1000.00 Punitive Damages, $300.00 Damage to Property, and $50.00 my Court Costs. I am being told I have to pay taxes on the entire Judgment, paying taxes on Punitive damages makes a little sense to me, but why should I have to pay taxes on money received for property damage because I already paid taxes on the damaged property when I first purchased it and I don't understand why I should be taxed on my security deposit refund because if I received when I should have, upon moving out, I wouldn't have had to pay taxes on it then. Not sure about being taxed on court costs reimbursed to me but that's not such a big deal to me as it only accounts for a little over 2% of the judgment. Can someone please help me figure this out?
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