Are awards received in a wrongful death case taxable?
AnswerMy condolences for your loss. I will only discuss the federal tax rules for your issue. You should be working with an attorney and a tax return preparer in settling your father-in-law’s estate. Amounts received for physical personal injuries (including wrongful death) are excludable from taxable income. Punitive damages are taxable income. (Internal Revenue Code Section 104(a)(2).) However, if only punitive damages may be awarded under a state’s wrongful death statutes, which were in effect on or before September 13, 1995, the damages are excludable (§ 104(c)). The CCH Federal Tax Service cites the Conference Committee Report to P.L, 104-188 (1996) H,R. Rep. No. 104-737 in concluding that nonpunitive damages received for wrongful death are excluded from income under Internal Revenue Code Section 104. The clarifying language under § 104(c) and Letter Ruling 200029020 also support this conclusion. Damages received under a wrongful death statute are excludable from the taxable estat
AnswerMy condolences for your loss. I will only discuss the federal tax rules for your issue. You should be working with an attorney and a tax return preparer in settling your father-in-law’s estate. Amounts received for physical personal injuries (including wrongful death) are excludable from taxable income. Punitive damages are taxable income. (Internal Revenue Code Section 104(a)(2).) However, if only punitive damages may be awarded under a state’s wrongful death statutes, which were in effect on or before September 13, 1995, the damages are excludable (§ 104(c)). The CCH Federal Tax Service cites the Conference Committee Report to P.L, 104-188 (1996) H,R. Rep. No. 104-737 in concluding that nonpunitive damages received for wrongful death are excluded from income under Internal Revenue Code Section 104. The clarifying language under § 104(c) and Letter Ruling 200029020 also support this conclusion. Damages received under a wrongful death statute are excludable from the taxable estat
