Are alimony payments considered taxable income?

Alimony, separate maintenance, and similar payments from your spouse or former spouse are taxable to you in the year received. The amount is reported on line 11 of Form 1040. You cannot use Form 1040A or Form 1040EZ. Refer to Tax Topic 406, Alimony Received, or Publication 504, Divorced or Separated Individuals.

References:

• Publication 504, Divorced or Separated Individuals
• Form 1040, U.S. Individual Income Tax Return
• Form 1040A, U.S. Individual Income Tax Return
• Form 1040EZ, U.S. Individual Income Tax Return for Single and Joint Filers with No Dependents
• Tax Topic 406, Alimony Received

Are child support payments considered taxable income?

No. Some types of income taxpayers receive are not taxable and child support is one of them. When you total your gross income to see if you are required to file a tax return, do not include your nontaxable income. For additional information, refer to Tax Topic 422, Nontaxable Income, or Publication 525, Taxable and Nontaxable Income.

References:

• Publication 525, Taxable and Nontaxable Income
• Tax Topic 422, Nontaxable Income

I received damages for emotional distress suffered as a result of employment discrimination. Is the money I received taxable?

Emotional distress is not considered a physical injury or sickness; therefore, damages for emotional distress are includible in income except to the extent they are paid for medical care attributable to emotional distress.

References:

• Publication 525, Taxable and Nontaxable Income
• Tax Topic 422, Nontaxable Income
• Revenue Ruling 96-65

Because of my age, my employer wanted to terminate my employment. I signed a statement not to sue and received a lump-sum payment from my employer for age discrimination. Is this payment taxable?

A lump-sum payment for cancellation of your employment is taxable income in the year you receive it and must be reported with your other salary and wages. This is true even if the payment was received (by suit or agreement) as settlement under the Age Discrimination in Employment Act.

Refer to Publication 525, Taxable and Nontaxable Income, for more details.

References:

• Publication 525, Taxable and Nontaxable Income
• Tax Topic 422, Nontaxable Income
• Revenue Ruling 96-65 and Commissioner v. Schleier, 115 US 2159 (1995)

Is the money received from my settlement taxable?

For court awards and damages, to determine if settlement amounts you receive by compromise or judgment must be included in your income, you must consider the item which the settlement replaces. Include the following as ordinary income:

1. Interest on any award.
2. Compensation for lost wages or lost profits in most cases.
3. Punitive damages. (But see below)
4. Amounts received in settlement of pension rights (if you did not contribute to the plan).
5. Damages for: (A) Patent or copyright infringement. (B) Breach of contract. (C) Interference with business operations.
6. Any recovery under the Age Discrimination in Employment Act.
7. Damages to your character.
8. Alienation of affection.

Do not include in your income compensatory damages for personal physical injury or physical sickness (whether received in a lump sum or installments).

Damages for emotional distress due to a physical injury or sickness are not taxable.

For additional information, refer to Publication 525, Taxable and Nontaxable Income, or Tax Topic 422, Nontaxable Income.

References:

• Publication 525, Taxable and Nontaxable Income
• Tax Topic 422, Nontaxable Income

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