Restitution Payment

Forum|Forum|4 years ago
February 23, 2022
1 reply
9 views

I received a restitution payment based on a court order from the State of California Victims of Corporate Fraud Compensation Fund. The payment was based on a criminal restitution order. Is this money taxable by the IRS or by the State of California? I have received no 1099G or any other documents indicating that the money is taxable. If it is taxable, how do I show it on my tax forms?

Spino

Alumni - Champ

You are responsible to report all taxable income regardless of whether you receive a form, but it is the forms the IRS checks using their computers.

Restitution payment can mean different things, but if you are being reimbursed for something you lost and you never reported the loss as a tax deduction, then the restitution may not be income but rather reimbursement (not taxable.)

This might be something worth consulting a professional about, especially if the amount is large.

vipr01Author

Level 2

Thanks for your help. The payment was rather significant, and the loss was never reported as a tax deduction so it is probably in that gray area where a tax professional would be helpful. As a side, the State of California has been no help at all in determining whether there are tax consequences involved.