What type of settlement did you receive?
Per IRS:
Awards and settlements can be divided into two distinct groups to determine whether the payments are taxable or non-taxable. The first group includes claims relating to physical injuries, and the second group is for claims relating to non-physical injuries. Within these two groups, the claims usually fall into three categories:
- Actual damages resulting from physical or non-physical injury;
- Emotional distress damages arising from the actual physical or non-physical injury; and
- Punitive damages
irs.gov
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