2007-02-23 02:58:56 · 4 answers · asked by buddyh 1 in Business & Finance ➔ Taxes ➔ United States
Awards and settlements for physical injuries and illness are not taxable.
Any portion of the award that is attributed to interest, lost wages, or punitive damages IS fully taxable, however.
If the disability did not result from physical injury or illness, it's fully taxable.
2007-02-23 03:58:10 · answer #1 · answered by Bostonian In MO 7 · 1⤊ 0⤋
Is this lump sum a settlement?
We would need to know if it was for punitive damages or compensatory damages.
Punitive damages are taxable, compensatory damages are not.
However, if this is just a disability income, i.e. supplementing your income it could be taxable as income.
2007-02-23 03:30:54 · answer #2 · answered by T H 4 · 0⤊ 0⤋
What Sammy said, and if the distribution is taxable, you may deduct legal fees associated with this settlement against your taxable amount. Your attorney should be able to advise you as to whether or not it is taxable.
good luck & bless
2007-02-23 03:15:19 · answer #3 · answered by Wood Smoke ~ Free2Bme! 6 · 0⤊ 1⤋
you need to talk to a tax professional to get the correct answer.
A CPA, or a tax preparer, or a financial advisor, and they can also then advise you (at least the CPA and financial advisor) on how to invest your money so that it works for you.
2007-02-23 03:07:52 · answer #4 · answered by SAMUEL ELI 7 · 0⤊ 1⤋