My neighbor's husband died in a nursing home in Virginia approximately 16 years ago. She had to sign a form and the document by the nursing home indicated that they are not admitting any guilt. She settled out of court for $90,000.00 and moved to California to live with her daughter. She was told by her attorney that the money was not taxable as it was wrongful death without admission. For the past two years, the state of California says it was taxable income even though she was living in Virginia at the time. I do understand that you aren't giving legal advice here due to ramifications. However, just wanted to know if she owes California state taxes. She showed me a 1099. This lady is 87 years old and does not need to be stressed. And advice you can provide would be helpful. Thank you in advance.
From what you have told me, it appears that the settlement should not be taxable. But there is the 1099 in question. It might be possible that the income was reported to the state of California (possibly because the company's attorneys were based out of California). So the state of California would have the 1099 income reported to them as "other income" but they don't know if it's taxable or not. California state tax law is very complicated, and I would recommend she show the document (and any letters she has received) to a qualified Tax Professional in California, who can then give proper advice on what should be done.
It depends on the way the structure is settled. If the award is simply for damages, it's not taxable. If the reward replaced lost wages, it's taxable. And of course, it could be a combination.
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My neighbor's husband died in a nursing home in Virginia approximately 16 years ago. She had to sign a form and the document by the nursing home indicated that they are not admitting any guilt. She settled out of court for $90,000.00 and moved to California to live with her daughter. She was told by her attorney that the money was not taxable as it was wrongful death without admission. For the past two years, the state of California says it was taxable income even though she was living in Virginia at the time. I do understand that you aren't giving legal advice here due to ramifications. However, just wanted to know if she owes California state taxes. She showed me a 1099. This lady is 87 years old and does not need to be stressed. And advice you can provide would be helpful. Thank you in advance.
From what you have told me, it appears that the settlement should not be taxable. But there is the 1099 in question. It might be possible that the income was reported to the state of California (possibly because the company's attorneys were based out of California). So the state of California would have the 1099 income reported to them as "other income" but they don't know if it's taxable or not. California state tax law is very complicated, and I would recommend she show the document (and any letters she has received) to a qualified Tax Professional in California, who can then give proper advice on what should be done.
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i am very curious on how proceeds of a sexual harassment award are handled. I have not found definitive information on the taxability. Ideas?
It depends on the way the structure is settled. If the award is simply for damages, it's not taxable. If the reward replaced lost wages, it's taxable. And of course, it could be a combination.