Do you have to pay taxes on a law suit?

That depends on the type of lawsuit. Generally, if the lawsuit is for damages that compensates you for some kind of loss, whether personal' like bodily injury, or economic, like loss of some asset, there is no income tax liability. This is because that money is not income; it is a replacement of something that should have existed but was lost due to some wrongful action by another person. On the other hand, a lawsuit to recover something like lost wages under a wrongful termination lawsuit would be taxable. That is because those proceeds represent money that would have been subject to taxes anyway. Also, even if the lawsuit is to recover a lost asset, more than likely, the damages will include interest on the asset from the time you lost it. That income is considered a separate part of the recovery and is subject to income taxes, again, because that money would have been taxed as it was earned.