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Is settlement penalty paid by an employee to employer tax deductible for the employee?

wmtsang
Level 3

The employee left early and had to pay $20k approx as settlement. Can it be deductible towards employee's taxes?

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4 Comments 4
itonewbie
Level 15

Is this based on a clawback provision for incentive, relocation, or similar payments?  If so, you can consider claim of right.

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Still an AllStar
IRonMaN
Level 15

Good answer.  But are we taking bets on whether or not the next question is "how do you deduct claim of right"?😁


Slava Ukraini!
itonewbie
Level 15

Hmmm... is getting a fish now better or knowing how to fish?  But they also say a bird in the hand is worth two in the bush...  Life is full of difficult choices...

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Still an AllStar
IRonMaN
Level 15

"is getting a fish now better or knowing how to fish"

Depends on how hungry you are at the moment.

"a bird in the hand is worth two in the bush"

Well, getting bird in the paw has been pretty much impossible for me so that really doesn't help me much.


Slava Ukraini!