I don't remember on mine, as the accountant figured it all out, but I would think that you do have to pay taxes on the whole amount of your back pay award and then the attorney also pays taxes on his income.

Look at it like this......A company has to pay taxes based on their income and when they pay their employees, the employees have to pay taxes. (that's tax x 2)

Then the employee goes to Walmart and buys a large screen tv and pays a sales tax, then Walmart pays taxes on it's income. Then they pay their employees who still have to pay taxes.

The money is taxable each time it trades hands and is income for a new person.

I hope that makes it clearer