Q: Hello, Is money awarded in a wrongful death case taxable on the state(MD) and Federal level? Thank you.Tom
I am soon to receive settlement money for a civil case I brought against a medical provider in the death of my wife.
A: No, it is not. It is not defined as income because it is compensation for a loss. Sometimes a jury verdict will separate out lost income (past or future) that a party has suffered as a component of damages, and when that is done, that portion is subject to income tax. Otherwise, in a lump sum verdict or settlement, the entire amount is deemed nontaxable.
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