Welcome to the MDTAXES Message Board

The MDTAXES Network is an affiliation of CPAs that specialize in the tax planning and preparation for young health care professionals.  Please leave your questions or comments for our CPAs, who visit the message board regularly, or review the answers, suggestions and ideas posted in response to your colleagues' questions.

Please check out our other Message Boards available at www.FindAGoodCPA.com.

Please note: We are NOT affiliated with the Maryland Tax Department. If you're looking for information about Maryland income taxes, go to www.marylandtaxes.com.

Original MDTAXES Forum
Start a New Topic 
Author
Comment
View Entire Thread
Re: Re: settlement money

Does this answer hold true for state taxes as well? I have a similar question, but live in NY state.

Re: Re: settlement money

Here's a little more info on the taxability of personal injury claims:

For damages received pursuant to a judgment or a settlement after August 20, 1996, in taxable years ending after such date, a change in the law has reduced the confusion and controversy surrounding the excludibility from gross income of damages received on account of a personal injury or sickness. For amounts received after August 20, 1996, all damages (other than punitive damages) awarded pursuant to a judgment or a settlement are excludible from gross income if received on account of personal physical injuries or physical sickness. It is immaterial whether damages are received in one lump sum or as periodic payments.

Damages received pursuant to a judgment or a settlement are NOT excludible from gross income if the underlying claim asserts a nonphysical personal injury or sickness, such as injury to reputation. Generally, emotional distress is not treated as a physical injury or physical sickness. However, damages awarded for emotional distress are excludible to the extent of amounts actually paid for medical care attributable to emotional distress.

Zip Code: 01801