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I got into a car accident as a pedestrian. I got a compensation of $2k. Do i need to declare the compensation for taxes?

it resulted in severe head trauma.

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WHile damages are not wages or "earned income," they are considered income and are taxable as other income (similar to interest and dividend income). However, compensation for medical costs may be deductible. The IRS should have a publication on what is and what is not considered income. Also, your state income tax rules may be quite different, so you may have to check with your state taxing agency as well.

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That was not earned income so no.

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All sorts of income are taxable, not just earned income. Interest and dividends, loan forgiveness, etc. Damages from a lawsuit ARE taxable income. Please don't give people tax advice when you don't know what you're talking about!
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You are correct. I should not have used the term "earned" income because this was not earned. But it's also not income. This compensation simply puts them back to where they were. They are no better off after the award then before. There was no advancement in income and there is no tax liability. I've been doing taxes since I've had income. I've got an undergraduate in accounting and an MBA. You might want to check your own advice.
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I"m an attorney. Believe me we consider the tax consequences of damage awards. Most awards ARE taxable under IRS rules. Reimbursement of medical costs are not, but awards for pain and suffering, diminution of value, and other things are. You might want to review the tax advice you've been giving your clients
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Nothing was mentioned about pain and suffering, diminution of value, etc. If the award was only for $2K, this could well be compensation for medical expenses suffered by the individual and as you state, not taxable. That was my assumption and the basis for my answer.
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The problem with this site is that the people asking questions don't give enough information. I assumed that head trauma was covered by insurance ($2000 will not even get you into the emergency room) and this person just settled for some nominal amount. You know about what assumptions do . . . .
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Agreed all the way around.
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It depends on what the $2000 was for...lost income, medical expenses, pain and suffering, etc. I think you have to pay taxes for lost income and pain and suffering. You should double check on that with your lawyer if you have one or on your own.

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I suppose you received compensation from an insurance company, yes? Unless the payer presents you with a form 1099 for tax purpose do not declare that money any where or any time.

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No you dont

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Normally, income from damages in a lawsuit IS taxable income.
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I never had to pay taxes on mine. Now that was a few years ago, so it may have changed!
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