No Rendering of Advice
To ensure compliance with IRS requirements, we inform you that any U.S. federal tax advice contained in this website (including any attachments or directed links) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.
Please be assured that this notice does not reflect any decrease in the quality of services or the amount of thought we put into our client interactions.
Any advice in this communication is limited to the conclusions specifically set forth herein and is based on the completeness and accuracy of the stated facts, assumptions and/or representations included. In rendering our advice, we may consider tax authorities that are subject to change, retroactively and/or prospectively, and any such changes could affect the validity of our advice. We will not update our advice for subsequent changes or modifications to the law and regulations, or to the judicial and administrative interpretations thereof.
For more information on Circular 230, please click here.
No Rendering of Advice
The information contained within this website is provided for informational purposes only and is not intended to substitute for obtaining accounting, tax, or financial advice from a professional accountant. Presentation of the information via the Internet is not intended to create, and receipt does not constitute, an accountant-client relationship. Internet subscribers, users and online readers are advised not to act upon this information without seeking the service of a professional accountant. Any U.S. federal tax advice contained in this website is not intended to be used for the purpose of avoiding penalties under U.S. federal tax law.
Accuracy of Information
While we use reasonable efforts to furnish accurate and up-to-date information, we do not warrant that any information contained in or made available through this website is accurate, complete, reliable, current or error-free. We assume no liability or responsibility for any errors or omissions in the content of this website or such other materials or communications. If you wish to contact the webmaster of this website, please call CPA Websites Solutions at 802-655-1519.
Disclaimer of Warranties and Limitations of Liability
This website is provided on an "as is" and "as available" basis. Use of this website is at your own risk. We and our suppliers disclaim all warranties. Neither we nor our suppliers shall be liable for any damages of any kind with the use of this website.
Links to Third Party Websites
For your convenience, this website may contain hyperlinks to websites and servers maintained by third parties. We do not control, evaluate, endorse or guarantee content found in those sites. We do not assume any responsibility or liability for the actions, products, services and content of these sites or the parties that operate them. Your use of such sites is entirely at your own risk.
We have moved! Please visit us at our new location at 134 Sipe Avenue, Hummelstown, PA 17036.
Reminders & Updates
2025 Standard Mileage Rates
| Purpose | Rates per Mile |
| Business | 70 cents |
| Medical/Moving | 21 cents |
| Charitable | 14 cents |
2024 Standard Mileage Rates
| Purpose | Rates per Mile |
| Business | 67 cents |
| Medical/Moving | 21 cents |
| Charitable | 14 cents |
Check It Out!
Check out the article in PICPA CPA Now by Greg Kashella, published November 2021, Enhanced Financial Statement Disclosures for Small Businesses.
Check out the article in the Central Penn Business Journal, Women Who Lead, March 2019 article featuring our partner Jori Culp
Tax-Related Identity Theft
The IRS combats tax-related identity theft with aggressive strategies of prevention, detection and victim assistance. To find out more about tax-related identity theft call our office or visit https://www.irs.gov/identity-theft-fraud-scams/identity-protection for information and guidance.
Remember that the IRS will never contact you by electronic means. This includes emails, phone calls, text messages, or social media channels. If you are ever in doubt whether contact by someone claiming to be from the IRS is legitimate, call our office first for verification.
Weekly Tax Brief
If you’ve recently received a settlement or award from a lawsuit, or you’re expecting one, you may be wondering how the IRS views this money. Will you need to pay taxes on it? The short answer: It depends on the type of damages you received. Understanding the basic rules can help you avoid surprises.
Taxable vs. nontaxable awards
Not all lawsuit settlements or awards are treated the same under federal tax law. Generally, the IRS breaks them into two categories:
- Taxable. Awards for lost wages, lost profits, breach of contract and most punitive damages are taxable. For example, punitive damages and awards for unlawful discrimination or harassment are taxable. If you receive compensation for back pay or unpaid wages, the IRS treats it just like income you earn on the job. It’s subject to both income and employment taxes. Also taxable are damages for emotional distress without a physical injury.
- Nontaxable. Settlements for personal physical injuries or physical sickness are typically excluded from income, meaning you don’t owe taxes on them. However, the injury must be physical (such as a broken bone or illness), not emotional.
Special considerations and reporting rules
It’s important to recognize that even when part of a settlement is nontaxable, other parts might not be. For example, a case involving both physical injury and lost wages will likely result in mixed tax treatment.
Attorneys’ fees are another area that can trip recipients up. Even if your lawyer is paid directly out of your settlement, you’re generally taxed on the full amount before fees are deducted. This means you may owe tax on money you never actually receive.
Settlements related to emotional distress or defamation are taxable unless they’re tied to physical harm. And punitive damages are almost always taxable, regardless of the type of case.
Why professional help matters
Navigating the tax consequences of a lawsuit award can be tricky. In many cases, the settlement agreement will play a key role in determining how the IRS classifies the payment. How damages are described in the settlement can have an impact on your tax bill. For example, it’s helpful to specify which portion of a split settlement is for physical injuries versus emotional distress or lost wages. In negotiating a settlement, it may be possible to stipulate that an award is for physical injuries, rather than emotional, and thus is nontaxable.
Without professional guidance, you could miss opportunities to minimize your tax liability or, worse, end up underreporting income. We can help you:
- Review a settlement agreement for tax implications,
- Determine how much of your award is taxable,
- Understand when estimated tax payments might be necessary, and
- Ensure you report everything accurately on your tax return.
Final thoughts
While winning or settling a lawsuit or legal claim can bring financial relief, it can also bring tax complexities. Don’t assume that all settlement money is tax-free or that the IRS won’t notice. You want to stay compliant, avoid surprises and make the most of your award. Contact us if you’ve recently received a settlement, award or judgment or you’re expecting one.
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