No. Most wrongful death settlements are not taxable.
However, in some instances portions of the settlement can be taxed. A settlement payment may consist of multiple elements that have been allocated by the parties. For example, an agreement may include allocations to back pay, emotional distress, and attorneys’ fees.
IRS Publication 4345 discusses the various types of lawsuits and the taxability of the resulting settlements. If you are unsure about what type of settlement you received, then please consult your attorney for clarification.
