Are proceeds derived from a va tort claim (us 18-1151 claim) taxable?

[DoninGA]

Was this a settlement for a personal injury claim against the Veterans Administration?

[da-rhoney1]

yes, asheville nc va medical center during post surgical care.

[DoninGA · Accepted solution]

See IRS Publication 5345 for information on personal injury settlements - https://www.irs.gov/pub/irs-pdf/p4345.pdf

If you receive a settlement for personal physical injuries or physical sickness and did not take an itemized deduction for medical expenses related to the injury or sickness in prior years, the full amount is non-taxable. Do not include the settlement proceeds in your income.

BUT

If you receive a settlement for personal physical injuries or physical sickness, you must include in income that portion of the settlement that is for medical expenses you deducted in any prior year(s) to the extent the deduction(s) provided a tax benefit. If part of the proceeds is for medical expenses you paid in more than one year, you must allocate on a pro rata basis the part of the proceeds for medical expenses to each of the years you paid medical expenses. See Recoveries in Publication 525 for details on how to calculate the amount to report. The tax benefit amount should be reported as “Other Income” on line 21 of Form 1040.