Discrimination Claim

Forum|Forum|4 years ago
March 6, 2022
2 replies
5 views

How can I exclude from gross income amounts paid for discrimination claim under IRC section 104 (a)(2) or under any other legal provision?

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taxiowa

Level 8

You have no place to exclude it, because you have to include it. There is exclusion from income for physical injuries or sickness, but not for discrimination. The award is simply taking the place of what taxpayer would have received if discrimination did not occur.

BobKamman

Level 15

Has the payment already been made and a 1099 issued? Or are you trying to avoid tax problems with something that has not yet happened? It's possible to have a discrimination claim that includes enough physical injury to qualify it under 104(a)(2). For examples, see the Tax Court cases that involve employees whose MS is aggravated, or who have a heart attack. But "emotional distress," by itself, is not a physical injury.

If a 1099 has been issued, the payor has made the determination that it is taxable. Failing to report it on a tax return, even when disclosing the reason, will be an uphill battle.

C

Cujo5209Author

Level 2

Total award was comprised of 2 parts. Part 1 on the W2 shows the Wage portion of the award which is what is used to calculate withholding taxes for income purposes Part 2 on the 1099 on box 3, other income reflects the non-wages/damages portion of the award. I was told. No Withholding Taxes were withheld from the 1099 non-wage/damages portion of the award. What I searching is possible tax reduction, any possible avenue to pay less taxes,

qbteachmt

Level 15

Have you used IRS resources, such as:

https://www.irs.gov/pub/irs-pdf/p4345.pdf

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