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I have a settlement agreement for an FCRA violation case. Is the settlement award taxable, as in the loser has to submit a 1099 on the settlement amount (it's over $600).Please see TITLE 26 - INTERNAL REVENUECHAPTER I - INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURYSUBCHAPTER A - INCOME TAXPART 1 - INCOME TAXES1.104 - 1 - Compensation for injuries or sickness.Section 104(a)(2) excludes from gross income the amount of any damages received (whether by suit or agreement) on account of personal injuries or sickness. The term damages received (whether by suit or agreement) means an amount received (other than workmen's compensation) through prosecution of a legal suit or action based upon tort or tort type rights, or through a settlement agreement entered into in lieu of such prosecution.
Optional Information: State/Country relating to question: Arkansas Already Tried: google
The award from the FCRA suit is an award for injuries you suffered because of their violation. Thus, these types of awards are not taxable as income.
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I was hoping you'd say that! Any chance you have any case law to back that up? I am assuming the defendant is going to challenge me on that.
There is nothing for the defendant to challenge, let them give you a 1099 and your tax preparer will explain it on your tax return as it being exempt income. This is a damage for injury and it is between you and the IRS, do not worry the defendant wants to file a 1099 as that would be handled in your tax return as damages for personal injury received.
Experience: Licensed attorney practicing landlord-tenant, land use and other real estate law and litigation.