Wrongful Death Compensation

[Brother of Vict]

What is the name of your state? Indiana

Is an insurance payout to parents in compensation for wrongful death of their daughter due to an auto accident considered taxable or untaxable income by IRS?

 

[LdiJ]

What is the name of your state? Indiana

Is an insurance payout to parents in compensation for wrongful death of their daughter due to an auto accident considered taxable or untaxable income by IRS?

I think that you should hire a tax professional to research this one for you.

The general rules about settlements are that anything that makes you whole, in part, in full, or ongoing is not taxable. (paying for the value of the car, paying for medical bills etc.)

Things that substitute for payment that normally would have been taxable are taxable and punitive damages are generally taxable.

I personally don't recall our firm having had this issue arise, so we have not had reason to research it. I think that it needs to be researched.

 

[abezon]

Wrongful death settlements are not taxable.