Questions: My question is, is this 2nd payment taxable?
- It depends. The second portion of the payment for non-pecuniary damages is not taxable if it is for physical injury and or physical distress. You seem to be quite certain of this fact. The language indicates the second payment is for physical injury. If you know you are not being paid for physical injury then
Examples of non-pecuniary damages -
- Pain and suffering: This includes the physical discomfort, distress, and anguish a victim experiences due to their injuries.
- Emotional distress: This refers to the emotional suffering a victim experiences.
As indicated by @Opus17, there is no deduction from this income for legal fees or other expenses if there is no unlawful discrimination. This would be specifically worded in your documents if discrimination is involved.
@superchunkee
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