What is the name of your state (only U.S. law)? kentucky
My husband settled in a personal injury civil action (active duty military connected but not combat related). The settlement states that the compensation he will receive will qualify under section 104 (a) (2) of the "Code". The settlement is paid out of an annunity which was agreered upon through a qualified assignment. The qualified assignment falls under section 130 (c) of the "Code", however the qualifed assignment does state that the payments will be qualified under section 104 (a) (2) of the "code". I am by no means an expert with tax law, so with that said, here I am (last night) reading IRS tax code and freaking out. Section 104 (a) (2) qualifies his settlement payments as non-taxable (right?). Ok, now it gets complicated. My husband also receives VA disability benefits (which he applied for after the civil settlement). I read on down to (4) of section 104 (a), then to (b) (2) (D) that says he is classified as (4). Now I look at (b) (4) and this is the freak out part. My husbands monthly settlement payment is less than his VA disability monthly benefit payment. SO, my question(s to you, is his settlement payment now taxable and includible as income? Like if I'm filling out an application of any sort and it asks to list my annual gross income and any other income, do I have to list any of his above mentioned payments as other income? It's not considered income if it's not taxable, right?
My husband settled in a personal injury civil action (active duty military connected but not combat related). The settlement states that the compensation he will receive will qualify under section 104 (a) (2) of the "Code". The settlement is paid out of an annunity which was agreered upon through a qualified assignment. The qualified assignment falls under section 130 (c) of the "Code", however the qualifed assignment does state that the payments will be qualified under section 104 (a) (2) of the "code". I am by no means an expert with tax law, so with that said, here I am (last night) reading IRS tax code and freaking out. Section 104 (a) (2) qualifies his settlement payments as non-taxable (right?). Ok, now it gets complicated. My husband also receives VA disability benefits (which he applied for after the civil settlement). I read on down to (4) of section 104 (a), then to (b) (2) (D) that says he is classified as (4). Now I look at (b) (4) and this is the freak out part. My husbands monthly settlement payment is less than his VA disability monthly benefit payment. SO, my question(s to you, is his settlement payment now taxable and includible as income? Like if I'm filling out an application of any sort and it asks to list my annual gross income and any other income, do I have to list any of his above mentioned payments as other income? It's not considered income if it's not taxable, right?