Are settlements to compensate someone for personal monetary damages taxable and reportable?

[pickaname]

Are defendants who pay a settlement for a matter that's compensatory required to file a 1099 with the IRS and the plaintiff? I looked around a bit and read these articles as well as section 104:
(commercial links removed)

The law and articles above are clear on some types of claims as far as what's taxable, but I'm not found any clarity on whether non-physical personal injury compensation must be 1099'd. Internal Revenue Code section 104 only addresses physical injury.

 

[quincy]

Are defendants who pay a settlement for a matter that's compensatory required to file a 1099 with the IRS and the plaintiff? I looked around a bit and read these articles as well as section 104:
[commercial links removed]

The law and articles above are clear on some types of claims as far as what's taxable, but I'm not found any clarity on whether non-physical personal injury compensation must be 1099'd. Internal Revenue Code section 104 only addresses physical injury.

Commercial links are not permitted on this forum. Your post was reported for moderator review.

A tax professional should stop by eventually to answer your questions.

 

[LdiJ]

Its not a simple as it might look. However, some general rules of thumb is that anything that replaces taxable income is taxable, anything that is designed to cover medical expenses or to replace assets is not taxable, and punitive damages are usually taxable.

However, each and every settlement has to be looked at individually to determine what might and might not be taxable. There is no "one size fits all".

 

[Taxing Matters]

You are using rather vague terms to describe what the claim was. What was the fault of the defendant and what injury did the plaintiff suffer as a result? And what was the relationship of the plaintiff and defendant — e.g. was the the defendant an employer of the plaintiff? Was the defendant a business and the injury occurred as result of that business?

 

[quincy]

pickaname has a history on this forum that might be worth reviewing. I haven’t reviewed it recently - but it might answer some of your questions.