If I get a settlement from my malpractice lawsuit, do I have to claim my "winnings" when I file my taxes?
2007-12-10 08:38:59 · 8 answers · asked by Anonymous in Business & Finance ➔ Taxes ➔ United States
Lex: Sorry. I didn't know what its called. "the moneys that you are awarded"? I don't know? Its not like I have lawsuits all the time and know all the lingo.
2007-12-10 08:49:24 · update #1
Yes, depends on the award. Usually Personal injury and physical sickness awards can be excluded. Punitive damages though are. Please read the following publication 4345, http://www.irs.gov/pub/irs-pdf/p4345.pdf. This gives you a good summary.
2007-12-10 09:05:13 · answer #1 · answered by Flawless02_97 1 · 1⤊ 0⤋
Since it is a settlement, your attorney may have some control over how the settlement is worded. You should see a tax professional to see if the settlement could be structured as non-taxable. It may save you a lot of money.
Jim Kirby, CPA
2007-12-10 16:26:29 · answer #2 · answered by Jim Kirby, CPA/PFS, CFP, CFS 3 · 1⤊ 0⤋
Irs Publication 4345
2016-10-15 01:13:43 · answer #3 · answered by Anonymous · 0⤊ 0⤋
Settlements for physical injury or illness are not taxable. However if any portion is earmarked as lost wages, interest or punitive damages, those portions are taxable as ordinary income in the year you receive them.
2007-12-10 08:48:30 · answer #4 · answered by Bostonian In MO 7 · 3⤊ 0⤋
Never gave too much thought about this
2016-09-19 23:34:31 · answer #5 · answered by Anonymous · 0⤊ 0⤋
No, all monies awarded by courts are not labeled as income and do not have to reported as such.
2007-12-10 08:52:07 · answer #6 · answered by erehwon 4 · 1⤊ 4⤋
Yes. "Winnings." *Yeesh* What a way to look at it. Like a jackpot.
2007-12-10 08:47:14 · answer #7 · answered by Lex 7 · 1⤊ 4⤋
unfortunately yes
2007-12-10 08:46:32 · answer #8 · answered by AlliCat 2 · 1⤊ 4⤋