Are wrongful death damages taxable?

In California, the answer to the question “Are wrongful death damages taxable?” is no. Generally, damages in a wrongful death lawsuit are not subject to taxation because, under the law, they are not considered “income” or “profit.” This means they are not considered income to the surviving family members who receive them. Instead, wrongful death damages are meant to compensate surviving family members for the loss of their loved one’s future earnings, as well as their pain and suffering caused by the incident. It is important to note, however, that there are certain instances where the wrongful death damages can be taxed. For example, if a settlement or judgment is large enough, the surviving family members may have to pay taxes on the interest earned from these funds. Additionally, if a portion of a settlement or judgment is paid directly to an attorney as part of their fee for the case, these funds may also be subject to taxes. In conclusion, while the damages awarded in a wrongful death lawsuit in California are not normally subject to taxation, there are certain circumstances where these funds may be taxable. It is important to consult a tax professional to determine if any taxes need to be paid.

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