Is a Wildfire legal settlement considered to be a Wildfire Relief payment?

[sim8t3]

I've searched around and I can't seem to find an answer to this question.   Last year I received around $500K from a federal disaster declared wildfire settlement that occurred in 2020. As I understand it all relief payments that are received between 2016 and 2026 are considered exempt per tax bill HR 5863 that was passed last year but does that exempt legal settlements? If so, are there any considerations or exceptions? Sorry if this is posted in the wrong place. Thanks

[VictoriaD75]

It depends on the nature of your legal settlement. According to HR 5863, In general.--The term ``qualified wildfire relief payment'' means any amount received by or on behalf of an individual as compensation for losses, expenses, or damages (including compensation for additional living expenses, lost wages (other than compensation for lost wages paid by the employer which would have otherwise paid such wages), personal injury, death, or emotional distress) incurred as a result of a qualified wildfire disaster, but only to the extent the losses, expenses, or damages compensated by such payment are not compensated for by insurance or otherwise.

Furthermore, this applies to payments received by the individual during taxable years beginning after December 31, 2019, and before January 1, 2026.

HR 5863

@sim8t3 

[sim8t3]

 I have looked at the Bill before posting and I just wanted to make sure I understand. how it reads.  We sued for both, loss of property and emotional damage, we settled out of court after mediation, due to the fact that the power company was certain they would win and we were tired of waiting for a resolution after nearly 3 years, not to mention the court date would have been months more later. I might add I have yet to receive a 1099, I have to check with the legal firm and see if I was supposed to?  I personally did not receive any compensation check from an insurance company, my now deceased father did for additional living expenses in I believe it was Nov 2020.  To the best of my recollection the Insurance check came before Dec 31, 2020. One thing I'm trying to understand is if indeed I have a tax liability it would not be only for what I received from the settlement, but for attorney's fees as well, which I take it, means the attorneys share of the settlement and that could be as much 35%, is that correct?  Thanks for taking the time to try answering my question.

@VictoriaD75