Today TaxMama hears from Karen in California in the TaxQuips Forum, who tells us. “My father died from lung cancer that was determined to be caused by job conditions. My brother and I may be receiving a one-time survivors benefit compensation check for a large amount of money. Will this be taxable income?”
How awful about your father! I doubt that any money can compensate you for losing him.
Will your benefit be taxable? Probably not.
But I would take the paperwork to a good, local tax professional and have someone read the information to see what the money is really paying for. Without reading the documentation, it’s impossible to be certain.
When it’s for lost income – that’s taxable.
When it’s for pain and suffering as a result of a physical issue (like death and illness), it’s not taxable.
There may be other issues in-between.
Odds are, you won’t be facing taxes. But please check, just to be sure.
You and your brother take care of each other. OK?
And remember, you can find answers to all kinds of questions about death-related compensation, and other tax issues, free. Where? Where else? At www.TaxMama.com.[Note: If you were subscribed to the e-mailed TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the join TaxMama.com link – it’s free!]
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