Updated almost 17 years ago on .
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Accident Settlement
So, I know this isn't related to real estate, but it does deal with taxes and investing, so I figured some of you guys would have some good suggestions.
Someone I know was in a car accident and he will be receiving a settlement now for the negligence of the other driver involved. I'm curious how this money would be noted for tax purposes - does it count as income (taxable)? does the attorney fee count as a deduction?
Note: The person I know is a minor and is a dependent.
Followup question:
If it is taxable, what are the options to best lower the taxable income? I thought about a 529 college plan?
If anyone needs more information, let me know.
Please help me out with any suggestions.