This IRS publication provides guidance on the taxability of settlement proceeds from lawsuits. It explains the conditions under which settlement proceeds must be included in income, including allocations for back pay, emotional distress, and attorneys' fees. It details the tax treatment of settlements for personal physical injuries, emotional distress, lost wages, lost profits, loss-in-value of property, interest, and punitive damages. The publication also advises on the need for estimated tax payments and the impact of settlements on health insurance coverage through the Health Insurance Marketplace.
documents/EFTA00810761.pdf
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