I was awarded 121,800 for compensatory damages and 250,000 in punitive damages. What is my tax obligation for the federal government and the state of Florida

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I was awarded 121,800 for compensatory damages and 250,000 in punitive damages. What is my tax obligation for the federal government and the state of Florida

I was wrongfully accused of sexual assault of a minor. I sued the person and was awarded 121,800 for my lost wages and other related costs. I was also awarded 250,000 in punitive damages.

Asked on October 7, 2018 under Personal Injury, Florida

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 2 years ago | Contributor

While you really need to consult with a tax professional (e.g. a CPA) to fully understand *your* tax liability, which depends on a number of factors including your overall income for the year, how much you have been paid on a W2 vs. 1099 basis, etc., as a general matter:
1) Because wages are taxable, compenation for lost wages is taxable, too, the same as other wages.
2) Punitive damages are taxable.
3) Compensatory damages which are reimbursement for costs you incurred (e.g. filing or court costs) are generally not taxable.


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