2007-04-19 12:15:43 · 2 answers · asked by Anonymous in Business & Finance ➔ Taxes ➔ United States
Herschel K, I can say with absolute authority that almost no one is more productive than I am. Please don't use my question to vent about your pathetic issues.
2007-04-19 12:27:27 · update #1
It depends on what the settlement is for, if its all for physical injury then none would be taxable, if a portion is for lost wages then the portion that is attributed to lost wages would be taxable. See publication 525 for more information
http://www.irs.gov/publications/p525/ar02.html#d0e7963
http://www.irs.gov/publications/p525/index.html
2007-04-19 12:36:01 · answer #1 · answered by Anonymous · 1⤊ 0⤋
If the settlement is for physical injury or illness, it's tax free. However if any part of it designated for lost wages, interest, or punitive damages, those portions are fully taxable as ordinary income.
If your settlement is for damages, such as to your home or car, the amount that makes you whole again is tax-free as long as it's used for the intended repairs. Anything over and above making you whole again is fully taxable.
If it's a suit for libel or some similar tort, it's fully taxable.
2007-04-19 12:44:28 · answer #2 · answered by Bostonian In MO 7 · 0⤊ 0⤋