Discrimination Claim

[Cujo5209]

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

[taxiowa]

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]

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.  

[Cujo5209]

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]

Have you used IRS resources, such as:

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