Tax

Have a tax question? Ask a tax Expert

Ask an Expert,
Get an Answer ASAP!

I am settling a case for punitive damages and emotional

Customer Question
I am settling a...

I am settling a case for punitive damages and emotional distress. They are saying they will be 1099 it. will this affect my taxes?

Accountant's Assistant: The Accountant will know how to help. Please tell me more, so we can help you best.

So I am trying to see if that would be taxed at the end of the year

Accountant's Assistant: Is there anything else important you think the Accountant should know?

Settlement amount

Submitted: 1 month ago.Category: Tax
Show More
Show Less
Ask Your Own Tax Question
Answered in 4 minutes by:
3/7/2018
Tax Professional: Lev, Tax Advisor replied 1 month ago
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 32,735
Experience: Taxes, Immigration, Labor Relations
Verified

Yes - these will be reported as taxable income.

Normally - that amount is reported to you on form 1099misc - box 3

and on your tax return - form 1040 - it will be transferred to line 21.

That amount is added to other taxable income.

If that payment will be in 2018 - it will be reported on your 2018 tax return.

Let me know if you need any help.

Ask Your Own Tax Question
Customer reply replied 1 month ago
How do I get it to not be taxed based on being a settlement for emottional distress?
Customer reply replied 1 month ago
A portion is being w2 and the other 1099 so it would not be taxed. Is there anyway for a portion to not be taxed.
Tax Professional: Lev, Tax Advisor replied 1 month ago

The statute ONLY allows to exclude from taxable income a settlement for personal physical injuries or physical sickness.

The proceeds you receive for emotional distress or mental anguish originating from a personal physical injury or physical sickness are treated the same as proceeds received for Personal physical injuries or physical sickness.

That amount is NOT reported on form 1099misc - it is specifically excluded.

But all other settlements are taxable.

If the proceeds you receive for emotional distress or mental anguish do not originate from a personal physical injury or physical sickness, you must include them in your income.

That is why it will be reported to you.

You will not be able to exclude that payment.

Ask Your Own Tax Question
Customer reply replied 1 month ago
It is better to have the settlement all w2 or a small portiion w2 and the the large amount 1099
Customer reply replied 1 month ago
Example 10k w2 and 40k 1099.
does it matter
Tax Professional: Lev, Tax Advisor replied 1 month ago

For income tax purposes - there is no difference - as all income is added together.

Wages reported on W2 are subject to additional employment tax withholding 7.65% will be withheld from your pay - so that is a matter - you may want less wages.

On the other hand - wages will increase your future social security benefits, and may have some other positive effect because that is earned income.

.

You might find helpful following publication regarding

Settlements — Taxability

https://www.irs.gov/pub/irs-pdf/p4345.pdf

Ask Your Own Tax Question
Tax Professional: Lev, Tax Advisor replied 1 month ago

I appreciate if you take a moment to rate the answer.

Experts are ONLY credited when answers are rated positively.

If you still have any doubts, need clarification - please be sure to ask.

I am here to help you with all Social Security / Tax related issues.

Ask Your Own Tax Question
Was this answer helpful?
Ask Lev Your Own Question
Lev
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 32,735
32,735 Satisfied Customers
Experience: Taxes, Immigration, Labor Relations

Lev is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Wallstreet Esq.

Wallstreet Esq.

Tax Attorney

586 satisfied customers

10 years experience

Mark D

Mark D

Enrolled Agent

1,338 satisfied customers

MBA, EA, Specializing in Business and Individual Tax Returns and Issues

Richard

Richard

Tax Attorney

4,451 satisfied customers

29 years of experience as a tax, real estate, and business attorney.

PhillipsEsq.

PhillipsEsq.

Attorney-at-Law

56 satisfied customers

B.A., M.B.A, J.D.

Robin D.

Robin D.

Senior Tax Advisor 4

15,124 satisfied customers

15years with H & R Block. Divisional leader, Instructor

Megan C

Megan C

Certified Public Accountant (CPA)

8,655 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

jgordosea

jgordosea

Enrolled Agent

2,885 satisfied customers

I've prepared all types of taxes since 1987.

< Previous | Next >

Related Tax Questions
If my taxable income for 2018 will be approx. $38,000, what
If my taxable income for 2018 will be approx. $38,000, what is my tax liability filing single. ( was widowed in late 2016. When I filed for 2017, my CPA had neglected to tell me there were different t… read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
15,124 satisfied customers
Filed form 1040 form took the standard deduction, I am now
filed form 1040 form took the standard deduction, I am now filing the new york state, … read more
Lev
Lev
Tax Advisor
32,735 satisfied customers
Do you offer assistance with Form 1040-ES? These are
these are estimated quarterly taxes for this year 2018 … read more
Mark Anderson
Mark Anderson
Attorney
Doctoral Degree
10 satisfied customers
VA income tax return form 760, Line 16, “ Taxable Income -
VA income tax return form 760, Line 16 , “Virginia Taxable Income - Subtract Line 15 from Line 9” what are the two bubbles “DTD” and “LTD” ? Should I fill in one ?… read more
PDtax
PDtax
Owner
Master\u0027s Degree
1 satisfied customers
On form 1040, line 27, what is the deductible part of the
On form 1040, line 27, what is the deductible part of the self-employment tax requiring schedule SE?… read more
Barbara
Barbara
Enrolled Agent, Paralegal
4,954 satisfied customers
On form 1040 line4 21 other income. is this where i should
on form 1040 line4 21 other income . is this where i should enter an amount shown from my pensiopn payments form 1099R … read more
Cole Parker
Cole Parker
Principal/CPA
Bachelor\u0027s Degree
87 satisfied customers
Tax question: If I filed form 1040 online and it was
Tax question: If I filed form 1040 online and it was accepted and afterwards I filed form 4868 and it says accepted, does this extend the FBAR? Please provide IRS references. Thanks! Jonathan Wyman, C… read more
Barbara
Barbara
Enrolled Agent, Paralegal
4,954 satisfied customers
Is social security a taxable income? Indiana. None
is social security a taxable income? JA: What state is this in? It matters because laws vary by location. Customer: Indiana JA: What steps have been taken so far? Customer: none JA: Anything else you … read more
Mike-USACPA
Mike-USACPA
9 satisfied customers
Is a settlement from employment taxable income? My husband
My husband received a settlement from his employer as he was no longer able to work as a patrol officer due to injuries. He had to take medical retirement … read more
Lev
Lev
Tax Advisor
32,735 satisfied customers
On IRS form 1040 line 20 taxable SS benefits. My wife draws
On IRS form 1040 line 20 taxable SS benefits. My wife draws SS benefits, I am still working, have a 403b retirement, do I use the 590-A form to figure?… read more
Lev
Lev
Tax Advisor
32,735 satisfied customers
Tax Question: IRS Form 1040, 4562 maybe tax professional For
Tax Question: IRS Form 1040, 4562 maybe tax professional For a barbershop. Would all these expenses be considered leasehold improvements or can they be expensed on schedule CThe contractors were the s… read more
Carter McBride
Carter McBride
LLM
973 satisfied customers
I see Form 1040 is for misc income. Does that activate a
I see Form 1040 is for misc income. Does that activate a self employment as? … read more
Barbara
Barbara
Enrolled Agent, Paralegal
4,954 satisfied customers
OH State income tax - Schedule A - personal tax return line
OH State income tax - Schedule A - personal tax return line 31. 1. What is the difference between "survivorship benefits" and "pension continuation benefits"? * New client for me. * OH resident * Spou… read more
Barbara
Barbara
Enrolled Agent, Paralegal
4,954 satisfied customers
Earned income credit, single and no children income 1392
earned income credit, single and no children income 1392 social security 15996.00 … read more
Barbara
Barbara
Enrolled Agent, Paralegal
4,954 satisfied customers
Need to walk through local earned income tax form. Did turbo
did turbo tax for federal and state,, trying to understand berkhiemers form for the local earned income,, moved from pa. to florida on july 1, 2017 … read more
Lev
Lev
Tax Advisor
32,735 satisfied customers
I want to ask a question about Income tax return form 1040..
Hello I want to ask a question about Income tax return form 1040.. I want to fill form but My wife doesnt have any ssn number. She is housewife and she has no income. Which option should I choose from… read more
James Daloisio
James Daloisio
Attorney
Doctoral Degree
163 satisfied customers
Ref Form 1040 Line 61 Health Care: Tax return has been sent
Ref Form 1040 Line 61 Health Care: Tax return has been sent to IRS, but I realized I failed to check Full-year coverage' box. Will returned be processed? What corrective action will be needed? Thank y… read more
Carter McBride
Carter McBride
LLM
973 satisfied customers
The address one uses on the first page of form 1040 is the
The address one uses on the first page of form 1040 is the mailing address or the address of residence?… read more
abci168
abci168
Principal
27 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x