Typically the answer is NO - because the damages you received were given in an effort to make you whole - you did not earn anything. Since it is NOT income - there is nothing to tax.
Because your case dealt with discrimination, however, i would defer to anyone in that practice area.
This is a federal tax question and given recent developments you should consult a tax attorney. the basic gist of the law is as follows:
1. A party with an employment generally has to report the settlement as income
2. You may then claim a deduction for attorney fees.
3. Some of what you are awarded are wages, which is directly taxable.
Consult a tax professions regarding this question. For employment cases, it is very different than it is for personal injury cases.
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