CalPers settelment taxability????

[skydriver]

Hello,

I had the CalPers Long Term Care Policy and was part of the Settlement.  I chose to receive the 80% refund of all my payments.  I also paid for these premiums with after tax dollars and took advantage of tax deductions for the years the I was covered.  I am wondering if the 80% of returned premiums are taxable.

Thank You

George Keillor

[SharonD007]

It depends. Legal settlements are often taxable; it depends on the type of settlement and would have been indicated in your settlement agreement. Generally, physical injury settlements aren't taxable unless you deducted medical expenses from the injury on a previous tax return. Non-injury settlements are considered other taxable income. You should receive a Form 1099 if your settlement is taxable. You will be taxed on the income based on the tax bracket that you fall in and the federal income tax rates. 

Please see the TurboTax article Are legal settlements taxable? for more information.

Refer to the TurboTax article Where do I enter an award from a taxable legal settlement? for instructions.