Tuesday, June 25, 2013

Is withholding required on damages or settlements for claims for personal physical injuries or sickness?

ABA Tax Accounting | Income Tax Service for Small Businesses | St. Paul, MN Accounting Firm
Payroll Service For Small Businesses - Generally, no. The amount of any damages (other than punitive damages) received as the result of a suit or settlement agreement on account of personal physical injuries or physical sickness are excluded from gross income. Accordingly, FICA, FUTA and income taxes are not withheld on such damages. Considering a Tax Professional? For no obligation free consultation contact us today!
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