1099-NEC for Pain & Suffering compensation

[Clipperclerk]

 A client has received a 1099-NEC for the amount clearly outline in the settlement agreement and general release as being intended to compensate for alleged emotional distress, personal injury, and physical sickness. Is this amount taxable income?

[Camp1040]

Personal injury in not taxable.

[garman22]

was some of it for loss of wages? Could they have been wrong on the breakdown?

[Clipperclerk]

There was a separate W-2 issued for the lost and unpaid wages awarded. 

[garman22]

Ah, 10-4!!

I agree with @Camp1040

I'd call the attorney and find out why they showed this on the 1099. AND NEC? Not 1099-Misc?

[Clipperclerk]

Yes 1099-NEC. 

[Clipperclerk]

Yea that  is what I thought. Just wanted make sure not missing anything. Thank you to you and  @Camp1040

[Camp1040]

From Forbes, , chain of events are a consideration.

If you make claims for emotional distress, your damages are taxable. If you claim the defendant caused you to become physically sick, those can be tax free. If emotional distress causes you to be physically sick, that is taxable. The order of events and how you describe them matters to the IRS.

[Clipperclerk]

Interesting. Thank you for additional info regarding chain of events consideration