Medical malpractice lawsuit

[Rexalan]

A medical malpractice lawsuit was filed for my brother for medical malpractice. He passed away and myself and 2 siblings received the settlement money. Is it taxable

[LindaS5247]

In general, settlement money for direct physical injuries or sickness in a medical malpractice suit is not taxable. However, any part of your settlement money that was for lost income or punitive damages is taxable.

Punitive damages are damages  that exceed regular compensation and are awarded to punish the defendant.

Punitive damages are taxable even if they were received for settlement of personal injury or physical sickness and should be reported as “Other Income”. on your tax return.

You can review your court settlement papers and your original complaint, or talk to your attorney to determine if any of your settlement was for lost income and wages or punitive damages.

Click here for additional information on Tax Implications of Settlements.

Click here for more information on the taxability of settlements.