That depends on
what makes up the settlement.
The part of the
settlement that covers economic losses you suffered, such as medical expense,
burial, funeral, and loss of earnings and financial support, are not taxable to
you by the Federal government. You will
need to check with your state as to whether or not such compensation is taxable
by them.
IF you took tax
deductions on your tax return for any of the expenses above that would be considered
tax deductible, those amounts will be taxable income.
For the rest of
the settlement that is not covering economic losses – awards that are to
compensate for other losses suffered - are taxable income to the recipient.
Those amounts
include:
- Punitive Damages
- Emotional pain
and suffering
- Loss of
companionship
For information
on how to enter taxable settlements, please look at the information below:
https://ttlc.intuit.com/replies/5753656
