4.4 Interest/Dividends/Other Types of Income: 1099 Information Returns (All Other)
How do I report income received as a prize or award?
If you win a prize in a lucky number drawing, television or radio quiz
program, beauty contest, or other event, you must include it in your income.
For example, if you win a $50 prize in a photography contest, you must report
this income on line 21 (other income), Form 1040. If you receive merchandise,
you must report the fair market value of the item(s) as income. Refer to Chapter
13 of Publication 17, Your Federal Income Tax, for additional
information.
References:
I won $250 in a charity raffle. Where do I show this on my return?
Gambling winnings are fully taxable and must be reported on your tax return.
You must file Form 1040 (PDF) and include all your
winnings on line 21 (other income). For information on deducting gambling
losses. Refer to Tax Topic 419, Gambling Income and Expenses,
or Publication 529, Miscellaneous Deductions, .
References:
4.5 Interest/Dividends/Other Types of Income: Alimony, Child Support, Court Awards, Damages
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 physical 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:
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, 515 US 323 (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:
Interest on any award.
Compensation for lost wages or lost profits in cases other than those
where the payments are for wages lost as a result of physical injury.
Punitive damages. (But see below)
Amounts received in settlement of pension rights (if you did not contribute
to the plan).
Damages for: (A) Patent or copyright infringement. (B) Breach of contract.
(C) Interference with business operations.
Any recovery under the Age Discrimination in Employment Act.
Injury to your reputation .
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 physical sickness
are not taxable.
Punitive damages are taxable. It does not matter if they relate to a physical
injury or a physical sickness.
For additional information, refer to Publication 525, Taxable and
Nontaxable Income, or Tax Topic 422, Nontaxable Income.
References:
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