Dear Mrs TMS,
There seems to be some confusions the handling of this case, between the different law suits. Sometimes the reporting and accouting for so many crossing streams of income can be mis-interpreted by accountants, CPA's, and yes, even the IRS.
There have been for example, incidents in the past years, which the IRS said i was supposed to have resolved, where 1099 income and other disability incomes were miscoded.
For example: If you receive third party payer W-2's for income received from an insurance company for sick or disability, then it is considered taxable if the employer paid the premiums, non-taxable if you paid the premiums, and apportioned between taxable and non-taxable if you both paid the premiums. A code J should be indicated on the W-2 if it is considered non-taxable.
You seem to be aware of this because you asked for amended W-2's and ended up suing for them. (I am not sure if you eveer won the case for amended W-2"s or received a cash settlement instead).
IN most cases settlements for personal incury, sick, disability is considered non-taxable, but there are exceptions.
If part of the settlement was to replace wages, such as the FMLA period, then it is going to be considered taxable income. If it is for replacement of sick and disability payment from a policy whose premiums were paid by the employer, it would be considered taxable.
NOtE: FMLA time is considered taxable, because employer may require you to use accrued sick and vacation time, wich is paid time off, concurrently with FMLA.
Now, I have a suspiciion, I really may not be answering your question. I think you have done a great job in giving me details, which proivde me an opportunity to give feedback.
CAn you give me a more clear picture of how I can help you, rather than simply reciting how this kind of payment or settlements are supposed to be handled.
Tax Preparer
GPHR Cert; U.S. Treasury Tax Advocacy Panel appointee
Dear Rrs TMSpooch1,
I apologize, but your additional informationdoes not apear, can you try again?
Mrs TMSpooch,.
I keep getting questioned about if I am following up with you, but your resonses to my questions do not appear in my list.