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greyhown
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Insurance proceeds from litagation

I recently won in mediation a lawsuit due to an automobile accident.  The proceeds are not from physical damages but from emotional distress.  Is the award taxable income?  

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Insurance proceeds from litagation

Damages for mental distress and emotional anguish are taxable unless received for a physical injury

Insurance proceeds from litagation

It depends on whether the mental distress was the result of a physical bodily injury to yourself (non-taxable) or the result of damage to your property or a stressful situation or bodily injury to someone else (taxable). 

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