Getting the right tax advice and tips is vital in the complex tax world we live in. The Kiplinger Tax Letter helps you stay right on the money with the latest news and forecasts, with insight from our highly experienced team (Get a free issue of The Kiplinger Tax Letter or subscribe). You can only get the full array of advice by subscribing to the Tax Letter, but we will regularly feature snippets from it online, and here is one of those samples…
Here’s a reminder on the tax treatment of damage or settlement awards: Proceeds received for physical injuries or physical illness are tax-free. On audit, IRS agents will look at the court petition, complaint, or claim that was filed, showing the original grounds for the lawsuit. They will review the settlement agreement to see how the document characterizes the amounts paid and received by the parties.
