Taxpayer's son (age 11) received a large settlement due to injuries. The taxpayer used the money to pay a large medical bill. Is it correct that the settlment isn't taxable. Can the taxpayer still itemize the medical expenses on schedule A?
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Medical
If the settlement was received for reimbursement of medical expenses, then non- taxable, T/P would make payment for those medical payments, therefore no deduction for Medical expenses on Schedule A - except for the amount paid over and above, out of pocket medical expenses. Or on Sched A you wold show Medical Expenses and then a "less reimbrusement"
Example: $ 11,000 medical - received $ 10,000 medical payments per settlement - out of pocket $ 1,000 that could be claimed on Schedule A
If the settlement award included some punitive damages, then might be a different reporting, as punitive would be taxable. You can look at Pub 525
Sandy -
Child received a large settlement for injuries resulting from a fire. Mother paid medical bills with this money, but the child received quite a bit more in settlement than the actual medical cost. The settlement was for injuries, so not taxable - correct? Since it isn't taxable, the mom can't also deduct the medical bills - correct?Comment
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Insurance Settlement?
Is this an insurance settlement? Sounds like it might have been for current and future medical expenses ongoing.
I believe, If all for medical and not punitive damages, then the settlement should be non-taxable, and any expense for medical expenses should be non-deductible up to the settlement amount
SandyComment
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