Disclaimer
The opinions expressed herein are my own personal opinions and do not represent anyone else's view in any way, including those of my employer.
© Copyright 2010
The opinions expressed herein are my own personal opinions and do not represent anyone else's view in any way, including those of my employer.
© Copyright 2010
I am going to receive a settlement and part of it is for my time off work from when I was hurt and off work for 7 months.I was injured and they are taking full responsibility for my injuries.
If it isn’t too late, have your lawyer review the papers. The company paying the settlement would prefer that as much of the money as possible be considered as taxable to you. Punitive damages are not taxable to you nor are they deductible on the company’s tax return.
Compensation for lost wages: taxable
medical expenses: nontaxable (most likely)
punitive damages: nontaxable
compensation for damaged personal property: probably not taxable (if you paid $3K for a car for which you receive $4K from insurance, $1K is taxable capital gain)
I hope this helps.
Gary
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6:08 pm - August 27th, 2010
Settlement for injury is not taxable. If it is for lost wages or interest, it is taxable.
References :
http://taxipay.blogspot.com/2008/08/us-income-tax-topics-1.html
6:42 pm - August 27th, 2010
Be sure they designate how much is for lost wages and how much for other things. The lost wages part is taxable.
References :
6:49 pm - August 27th, 2010
If the wages are part of the injury suit, they are not taxable to you. No settlement for personal injury is taxable unless there is interest accrued after the settlement but before the completion of the check.
The paperwork must be completely read in order to know if the wages are a part of the injury.
Helen, EA in PA
References :
7:29 pm - August 27th, 2010
If it isn’t too late, have your lawyer review the papers. The company paying the settlement would prefer that as much of the money as possible be considered as taxable to you. Punitive damages are not taxable to you nor are they deductible on the company’s tax return.
Compensation for lost wages: taxable
medical expenses: nontaxable (most likely)
punitive damages: nontaxable
compensation for damaged personal property: probably not taxable (if you paid $3K for a car for which you receive $4K from insurance, $1K is taxable capital gain)
I hope this helps.
Gary
References :