2007-01-28 06:00:11 · 2 answers · asked by sherry o 1 in Business & Finance ➔ Taxes ➔ United States
Compensation for physical injuries is not taxable. Any portion that replaces lost wages or reflects interest on the award is taxable as ordinary income as are punitive damages.
The source of the annuity and who paid for it are factors with annuities, however.
If the annuity is from a plan that your employer paid for, the payments are fully taxable.
See IRS Pub 575 for further information.
2007-01-28 06:19:32 · answer #1 · answered by Bostonian In MO 7 · 0⤊ 0⤋
usually funds awarded out of litigation for injury are not taxable .. but it depends on which state you are in and whether there were punative damages awarded. 20 mins with your local CPA would save you much headache and would only cost you $50
2007-01-28 06:08:47 · answer #2 · answered by tonkatruk_2001 3 · 0⤊ 1⤋