We received a settlement due to a wrongful death. We know this money is not taxable, but how do we need to list it on our taxes

Asked over 2 years ago - Broomfield, CO

I want to make sure we do our taxes properly since we do our taxes ourselves.

Attorney answers (5)

  1. Christopher Michael Larson

    Pro

    Contributor Level 19

    13

    Lawyers agree

    Answered . This income is excluded, which implies that it doesn't even need to be listed on the return. Did you receive a 1099? Did it list the amount as taxable? if it shows as untaxable, the IRS already knows this will not be included. Not a bad idea to spend a few hundred dollars on a CPA in years where things like this happen.

    Christopher Larson
    Insight Law
    www.insightlawfirm.com

  2. Rixon Charles Rafter III

    Contributor Level 20

    12

    Lawyers agree

    Answered . You should approach a tax specialist. Depending on your circumstances you may have a number of options. On the slim facts you provided, you are unlikely to get an answer that maximizes your options.

    READ THIS BEFORE CALLING OR EMAILING ME: I am licensed in the Commonwealth of Virginia, addressing your issue does... more
  3. Daniel Nelson Deasy

    Contributor Level 20

    10

    Lawyers agree

    Answered . Be very careful! If the release that was executed prior to your receipt of funds references lost wages, there could be a tax consequence! Ask an attorney experienced in personal injury matters to look over the release!

    In no way am I offering you legal advice, and in no way has my comment created an attorney-client relationship.... more
  4. Steven Anderson Leahy

    Pro

    Contributor Level 17

    10

    Lawyers agree

    Answered . I agree with my colleagues. Generally, a tax return is used to report income - If the court award is not income, it does not have to be reported. Unfortunately, there are always exceptions, that's why you need a tax professional. Especially, when something out of the ordinary happens.

    I hope this helps.
    Respectfully,
    Steven A. Leahy
    www.chicagotaxteam.com

    Please note that the above is not intended as legal advice, it is for educational purposes only. No attorney-... more
  5. Lars A. Lundeen

    Pro

    Contributor Level 20

    6

    Lawyers agree

    Answered . The IRS has a toll free number to answer technical tax questions. Call them. (These types of recoveries are not generally taxable nor reportable. Still, call the IRS.)

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