Have a Tax Question? Ask a Tax Expert
Punitive damages are taxable and should be reported as “Other Income” on line 21 of Form 1040, even if the punitive damages were received in a settlement for personal physical injuries or physical sickness.
Some settlement recipients may need to make estimated tax payments if they expect their tax to be $1,000 or more after subtracting credits & withholding. Information on estimated taxes can be found in IRS Publication 505, Tax Withholding and Estimated Tax, and in Form 1040-ES, Estimated Tax for Individuals.
Please advise if you need more information or rating in a positive way is acceptable.
If you require more information please advise.
I really enjoyed working with you – please feel free to request me again when you come back to ask another tax question.