No, the IRS will not tax lawsuit settlement proceeds that a court awards for physical illness or injury, these are non-taxable and include wrongful death settlements.
It's recommended that you review and compare any legal documents received to the information found at:
https://www.irs.gov/government-entities/tax-implications-of-settlements-and-judgments
and determine whether payment includes other item such as punitive damages which may be taxable.
source: https://ttlc.intuit.com/community/taxes/discussion/i-recieved-a-portion-of-the-settlement-in-a-wrong...
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