Are wrongful death damage awards taxable?

 Types of Wrongful Death Damages in Georgia

In order to understand which parts of an award might be taxed by the IRS, you need to understand the types of damages. Damages in a wrongful death claim can be broken down into three categories:

1. Economic or “special” damages

These are quantifiable in dollar amounts such as medical bills, funeral expenses, and lost or damaged personal property of the deceased that had to be replaced. There is no limitation or ceiling on the amount of economic damages that can be recovered. Economic damages are compensatory damages that can be recovered in either an out-of-court settlement or at trial.

2. Non-economic or “general” damages

These aren’t quantifiable and instead are determined using a well-established and approved calculation method. These can include pain and suffering if the death didn’t occur immediately after injury, wages they would have contributed to the household, or the loss of companionship caused by the death. In most cases, non-economic damages are capped at $350,000 unless multiple medical facilities were at-fault for the death, in which case it rises to $700,000. These compensatory damages can be received in a settlement or at trial.

3. Punitive damages

Punitive damages may only be received at trial if they were properly pleaded in the complaint and if they are linked to the decedent’s pre-death injuries and suffering.

These damages are intended to punish the defendant, but in order to receive them, the plaintiff must prove that the defendant’s actions showed ​​ “willful misconduct, malice, fraud, wantonness, oppression, or that entire want of care which would raise the presumption of conscious indifference to consequences.” O.C.G.A. §51-12-5.1(b)-(d)