Is a wrongful death settlement taxable?
Question Details:
I received a settlement of $150,000 in a lawsuit (a State Trooper shot and killed my unarmed, 30 year-old son). After giving the attorney 1/3 and splitting the rest with my ex-wife (his mother) and paying court costs and attorney expenses, I have a little over $40,000 left. What will I have to save out of that for taxes?
Internal Revenue Code §61 (a) includes in gross income “all income from whatever source derived” unless excluded by a specific provision of the Code.
Internal Revenue Code §104 (a)(2) excludes from gross “amount of any damages received (whether by suit or agreement and whether as lump sum or as periodic payments) on account of personal physical injuries or physical sickness”.
So, it may well be non-taxable income, however, you shoould confirm this with an accountant.
