[beetlejuice55]

Hello, can anyone tell me if there are any federal taxes on monies received from a wrongful death lawsuit? Thank you... :o

[AtlantaTaxExpert]

Generally, punitive damages are fully taxable as ordinary income.

Also, compensatory damages for lost wages/lost income are also fully taxable.

Only compensatory damages for injuries are tax exempt.

[taxsearcher]

Hello, can anyone tell me if there are any federal taxes on monies recieved from a wrongful death lawsuit?? thank you.....:o

I'm not an expert in this area but there are some exceptions whereby wrongful death damages will be excluded. See Section 104(c) of the tax code (I've copied it below). ATE is definitely correct in saying that punitive damages are usually taxable but this exception is worth checking:



The phrase “(other than punitive damages)” shall not apply to punitive damages awarded in a civil action—

(1) which is a wrongful death action, and

(2) with respect to which applicable State law (as in effect on September 13, 1995 and without regard to any modification after such date) provides, or has been construed to provide by a court of competent jurisdiction pursuant to a decision issued on or before September 13, 1995, that only punitive damages may be awarded in such an action.


This subsection shall cease to apply to any civil action filed on or after the first date on which the applicable State law ceases to provide (or is no longer construed to provide) the treatment described in paragraph (2) .