Are Structured Settlement Payments Income?
John Darer • October 5, 2018
Do You Have to Report Structured Settlement Payments?
Structured settlement payments are income
, however structured settlement payments are exempt income,
if they represent payment of damages for personal physical injury, physical sickness, wrongful death or workers' compensation, and wrongful imprisonment [ see Internal Revenue Code of 1986, as Amended Sections 104(a)(1), 104(a)(2), 139F and 130].
Structured settlement payments you receive during the year under the above circumstances, are not reportable
on your tax return according to two CPAs I asked.
Here's what the IRS says:
If you
receive a settlement
for personal physical injuries or physical sickness and did not take an
itemized deduction for medical expenses related to the injury or
sickness in prior years, the full amount is non- taxable
. Do
not include the settlement
proceeds in your income.
Where structured settlement are used to pay for taxable damages or for structured attorney fees, payments are generally considered income and reportable in the year received.
Always speak to your CPA about your personal tax situation.
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A structured settlement annuity does not drive the tax consequences of structured settlement annuity payments. It is the type of damages the structured settlement annuity payments represent, as reflected in the relevant settlement documentation executed by the settling parties
Structured settlement beneficiary death claim. An executor cannot change the beneficiary of a structured settlement annuity. StructuredTypically, settlement agreements permit the Payee to name or change a beneficiary, provided such change is in writing and submitted to the Assigmment Company or annuity issuer in writing and in proper form.
