topic 2017 SONOMA COUNTY PGE FIRE DETERMINATION AWARD MONEY in Get your taxes done using TurboTax

2017 SONOMA COUNTY PGE FIRE DETERMINATION AWARD MONEY

kknumber32012 — Wed, 28 Jun 2023 21:40:51 GMT

We received an check from the 2017 PGE Fire Trust. We know California State Taxes do not need to be paid on this money but what about Federal Taxes?

Re: 2017 SONOMA COUNTY PGE FIRE DETERMINATION AWARD MONEY

Lydia23 — Wed, 28 Jun 2023 22:04:34 GMT

Hello kknumber32012,

Thanks for reaching out. Generally, federal and state law allow an exclusion from gross income for settlement amounts (which means they are not taxable), except for punitive damages, which result from personal physical injuries or physical sickness. So basically it depends on the type of settlement. The settlement type will be listed in your Final Settlement Agreement.

Thanks again for reaching out.

Re: 2017 SONOMA COUNTY PGE FIRE DETERMINATION AWARD MONEY

heidis1 — Wed, 28 Jun 2023 22:05:44 GMT

Hi kknumber32012,

I found that ... Generally, federal and state law allow an exclusion from gross income for
settlement amounts, except for punitive damages, which result from personal
physical injuries or physical sickness. However, amounts awarded for emotional
distress must be included in gross income. In addition, in some cases federal
and state law require the settlement recipient to include attorney’s fees in their
gross income. This act specified that any amount received in settlement claims
including payments made from the PG&E trust to fire victims related to the 2015
Butte fire, 2017 North Bay fire, and 2018 Camp fire can be excluded from gross
income, for state purposes, for both Personal Income and Corporation
taxpayers. As this time the federal government does not offer
a similar benefit.

You can keep connected with changes thru this link:

PG&E Wildfire Settlement Payments

You can review this IRS link:

Tax Implications of Settlements and Judgments

Hope this helps. Thanks for asking.

Re: 2017 SONOMA COUNTY PGE FIRE DETERMINATION AWARD MONEY

Denisev1220 — Wed, 28 Jun 2023 22:09:01 GMT

Here is some inormation and it seems there is a bill in Congress to make it fully non-taxable: PGE trust payments

Re: 2017 SONOMA COUNTY PGE FIRE DETERMINATION AWARD MONEY

Kelly Thomas C — Wed, 28 Jun 2023 22:09:48 GMT

There has been much heated debate over the federal taxation of this. CA residents and politicians are working hard to make this exempt. Rather than summarize where they are on this, I would prefer to refer you to this site: https://calfiretaxinfo.org/latest-news/

which seems to be tracking this carefully.

You could file your federal and state tax return an NOT report this, but be aware the IRS could send you a notice saying you have unreported income. (if it ended up being taxable).

Alternatively, you could report it as income, and then try to claim a refund by amending your return, if it turns out to not be taxable.

My personal preference would be to not report it as income at federal level, but be prepared to send in the tax due, if it turns out to be taxable. With this approach, you wouldn't be troubled to file an amended return to get your overpaid tax. Others on the team might have a different take on this, and are welcome to weigh in.

Good luck to you,

Kelly C,

CPA