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When settling an employee litigation lawsuit, there are important tax implications to consider. In Kara's case, her sexual harassment suit is ready to settle for five hundred thousand dollars. Kara is advised to consider two options on how she could receive her money. She can take it now in one large payment but then she'd owe almost 146,000 in federal income taxes, leaving her around 354,000 from her settlement. Kara's other option is a taxable structured settlement, providing tax efficiency, guaranteed income payments, and the support of a trusted company. Kara takes 100,000 in cash now and agrees to put the remaining 400,000 in a 10-year taxable structured settlement. This option will reduce her taxes - she'll owe about 15,000 in federal income taxes now and by receiving the payments over 10 years she'll owe only about 34,000 more, resulting in a federal income tax savings of about 96,000 plus a guaranteed annual income.