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Missy714
Level 1

Is a wrongful death settlement taxable? The attorney who settled my husbands death case against the county said the money was not taxable. I rec’d a 1099-MISC though?

 
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hbl3973
Level 8

Is a wrongful death settlement taxable? The attorney who settled my husbands death case against the county said the money was not taxable. I rec’d a 1099-MISC though?

Missy714,

 

Your attorney was very likely correct, but see, for example,

 

https://bloggerinterrupted.com/are-wrongful-death-settlements-taxable/

 

and

 

https://www.irs.gov/pub/irs-pdf/p4345.pdf

 

 

for any wrinkles that might have generated a 1099-MISC.

 

If the settlement is indeed exempt from tax, you will want to add a note to your tax return explaining why you didn't report the 1099-MISC as taxable income.  Or you can later deal with a nastygram letter from the IRS proposing additional tax due which could take quite a lot of time and effort to resolve.

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1 Reply
hbl3973
Level 8

Is a wrongful death settlement taxable? The attorney who settled my husbands death case against the county said the money was not taxable. I rec’d a 1099-MISC though?

Missy714,

 

Your attorney was very likely correct, but see, for example,

 

https://bloggerinterrupted.com/are-wrongful-death-settlements-taxable/

 

and

 

https://www.irs.gov/pub/irs-pdf/p4345.pdf

 

 

for any wrinkles that might have generated a 1099-MISC.

 

If the settlement is indeed exempt from tax, you will want to add a note to your tax return explaining why you didn't report the 1099-MISC as taxable income.  Or you can later deal with a nastygram letter from the IRS proposing additional tax due which could take quite a lot of time and effort to resolve.

View solution in original post

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