Question

Do I need to report a settlement from a negligence case that resulted in the death of my dog?

Forum|Forum|3 years ago
February 4, 2023
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TurboTax Online

It depends on the type of settlement proceeds you received and what they represented. If you received punitive damages, this would be taxable income, and often a Form 1099 would be issued.

Property settlements for loss in value of property that are less than the adjusted basis of your property are not taxable and generally do not need to be reported on your tax return. However, you must reduce your basis in the property by the amount of the settlement. If the property settlement exceeds your adjusted basis in the property, the excess is income.

See IRS Publication 4345 for more information.

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D

dussellrottAuthor

Thank you, Monika. Does it make a difference if this was a settlement out of court?

It feels like the category that best applies to this is wrongful death, which I believe is not taxable. I've also been told that dogs are looked at as property, and not companions, and this may be viewed as property damages, which feels like you may have been referring to at the end?

DawnC

Employee

Did you receive a tax form? You should have a Final Settlement Agreement which will indicate the type of settlement you received. The type of settlement is what dictates the tax treatment. See Taxability of Legal Settlements. To enter a taxable legal settlement, see How do I enter a legal taxable settlement?

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