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compensation for lost wages due to car accident

Level 2

Is a compensation for lost wages due to a car accident subject to Social Security tax? if so, how do I enter it in Pro Series basic?

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5 Replies 5
Level 14

If part of a claim for damages for physical injuries that actually happened, then the entire settlement is not taxable.  

Level 2

Thanks BobKamman, would that be the reason the taxpayer did not get a form 1099?

Taxpayer did receive money to pay for medical expenses and because she was out for 3 months, so; according to your message the compensation is tax free. Is there a Pub that you can refer me to? 

Thanks, I appreciate your help.


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Level 15

Your client would get a W2, if this is Lost Wages replacement. You didn't tell us who paid for this.

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Level 2

Sorry about that, payment received from car insurance company

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