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I received a settlement on a wrongful death lawsuit. Do I have

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to pat taxes on this...
I received a settlement on a wrongful death lawsuit. Do I have to pat taxes on this money?
Submitted: 4 years ago.Category: Tax
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2/1/2013
Tax Professional: Lev, Tax Advisor replied 4 years ago
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,700
Experience: Taxes, Immigration, Labor Relations
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LEV :

Hi and welcome to Just Answer!
That is not taxable income. I will provide a reference for your confidence - please stay with me...

LEV :

Please see for reference IRS publication 525 - www.irs.gov/pub/irs-pdf/p525.pdf
Court awards and damages. To determine if settlement amounts you receive by compromise or judgment must be included in your income, you must consider the item that the settlement replaces.
and after that..
Do not include in your income compensatory damages for personal physical injury or physical sickness (whether received in a lump sum or installments).
So far a settlement in the wrongful death case is NOT taxable.
See also this publication - http://www.irs.gov/pub/irs-utl/lawsuitesawardssettlements.pdf
See page 36 fro http://www.irs.gov/pub/irs-utl/lawsuitesawardssettlements.pdf
Another issue - if that amount was reported to you on any informational form? If yes - you may not simply ignore it because the IRS would expect to see that amount on your tax return. In this case - you need to attach a letter with explanations to your tax return.
However if nothing reported - no need any explanations.

LEV :

Let me know if you need any clarification or help with other tax related issues.

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Tax Professional: Lev, Tax Advisor replied 4 years ago
It was reported that you are not able to see the answer in chat.
I switched to Q&A mode and posted the answer below.
Please feel free if you need any help.
Sorry for any inconvenience this matter.

Hi and welcome to Just Answer!
That is not taxable income. I will provide a reference for your confidence - please stay with me...
2:08 PM
Please see for reference IRS publication 525 - www.irs.gov/pub/irs-pdf/p525.pdf
Court awards and damages. To determine if settlement amounts you receive by compromise or judgment must be included in your income, you must consider the item that the settlement replaces.
and after that..
Do not include in your income compensatory damages for personal physical injury or physical sickness (whether received in a lump sum or installments).
So far a settlement in the wrongful death case is NOT taxable.
See also this publication - http://www.irs.gov/pub/irs-utl/lawsuitesawardssettlements.pdf
See page 36 for wrongful death cases.

Another issue - if that amount was reported to you on any informational form? If yes - you may not simply ignore it because the IRS would expect to see that amount on your tax return. In this case - you need to attach a letter with explanations to your tax return.
However if nothing reported - no need any explanations.
2:27 PM
Let me know if you need any clarification or help with other tax related issues.
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Lev
Lev
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