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Chad Oberg
Chad Oberg, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 174
Experience:  10 + years of accounting and tax experience, financial statements and business planning
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Got ran over by a car 2008 and had surgery done to my foot.

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Got ran over by a car 2008 and had surgery done to my foot. Never will be the same.
In pain every day. The claim was settled for 35,000.00 out of that I had about 8,000
of expenses I had to pay. Do I have to pay tax on this money? If so how does it work?

Customer,

 

Per the Master Tax Guide and IRS Code:

Damages (other than punitive damages) that compensate an injured person for personal injuries or physical sickness are excludable from gross income (Code Sec. 104(a)(2). Damages received for personal nonphysical injuries, such as employment discrimination or injury to reputation, are generally taxable. Interest on a judgment, including mandatory prejudgment interest, is generally includible in income.

 

Attorney Fees and Court Costs and attorney fees paid in connection with an action based on unlawful discrimination under federal law (as well as certain other claims, such as whistle blowing actions) are deductible from the determination of adjusted gross income.

 

Regards,

 

Chad

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