Monday, March 29, 2010
Insurance Settlements Differ
Thank you so much for your wonderful tax tips -- Maze Archives.
I'm wondering if you might shed some light on a particular tax issue.
Last year (2009) my wife agreed to a (rather small) settlement for damages due to a physical injury caused by her work. She was also laid off as a result of this action. Yesterday, we received from this company a Form 1099-Miscellaneous Income from this company. The damages settlement was shown in Box 7-Nonemployee Compensation.
Do you have any idea regarding how this amount should be reported to the IRS on our 2009 income taxes--and even if it is taxable generally?
We would appreciate it if you could give us some direction here.
You need to talk with a tax pro -- H&R Block is the least expensive and is also equipped to handle this -- and have him/her read the settlement your wife agreed to.
Different kinds of settlements are taxed differently. The 1099 may be correct or may not.