Estate Law Questions? Ask an Estate Lawyer.
Hi; My goal is to provide you with great service - if you have any questions during our chat, please ask! I'll do my best to ensure your satisfaction! These nursing home lawsuits are becoming more common, and are generally categorized as personal injury. From a federal perspective, personal injury settlements are not taxable. However, let me check with Virginia. A few moments please.
In the meantime, here's some information from the IRS direct, with page 11 and 12 addressing this issue. http://www.irs.gov/pub/irs-utl/lawsuitesawardssettlements.pdf
If interest was paid on the underlying sum (as is generally the case), then this portion would be taxable.
For class actions, generally they will send a letter with a 1099 for the portion that is taxable (simultaneous with the check).