by John Darer® CLU ChFC MSSC RSP CLTC
While the payments from a structured settlement ARE viewed as income, such income is gnerally exempt from income taxes.
A definition of income is found at Section 61(a) of the United States Internal Revenue Code which reads "Except as otherwise provided in this subtitle, gross income means all income from whatever source derived"
Structured settlements are primarily used to pay damages for personal physical injury or physical sickness, wrongful death, or claims pursuant workers compensation statute. IRC 104(a)(1) and IRC 104(a)(2) provide exemptions for income paid that possesses such characteristics.
Structured settlements with payments that represent payment of taxable damages are fully taxable when received. Taxable structured settlements, also known as non qualified structured settlements, benefit plaintiffs in employment settlements, as well as attorneys who structure their legal fees, by way of tax deferral.
visit Defer The Taxes