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In California does a person have to pay taxes on a (physical) personal injury settlement?

In California does a person have to pay taxes on a (physical) personal injury settlement?

personal injury
newm0mmy asked:


I’m not sure what a 1099 form is or if and when I will have to file it for my (physical personal injury) settlement. Any info or input would be greatly appreciated.

American Express Platinum

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Comments

  1. MinocStriker says:

    Well, on your federal return, you exclude from gross income damages received as compensation for person physical injury and as the federal returns exclude it from income, I’m sure California does also.

  2. Hank Roitman, EA says:

    No, CA conforms to Federal law in this area… compensatory damage money for personal injury is not taxable income. However, punitive damages and lost wages ARE income for both Fed & CA

    You should not send a 1099, as that is required of payers, not payees. If you do receive a 1099misc, the amount should be in box 3 NOT box 7. You then show it on 1040 line 21 and then deduct the same amount from AGI on line 36.

    Any lost wages should be reported by the payer on form W2 with deductions for Social Sec. & Medicare.

    Hank Roitman, EA
    Sacramento, CA

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