she was told that this money should be is tax exempt. The money is in a c/d and she has received an interest income statement. How will anyone know that the money is exempt. She wants to apply for PAAD, however that interest income puts her over the limit.
What can she do? Thanks for your advice/help.
My mom is not trying to avoid working, she is well past retirement and has worked very hard all her life. Her interest income only puts her over the limit by a couple hundred dollars.
Ryan M
The amount of the settlement IS tax exempt, however the interest from the CD is NOT tax-exempt. Sounds like you mom is trying to avoid working for the rest of her life!
LT
The money she received from the lawsuit is tax exempt... the money she makes from the interest is not exempt.
bostonianinmo
Settlements for physical injury or illness are not taxable.
However the interest is taxable. If that puts her over the limit for PAAD then she does not qualify. She'll have to spend down her wealth until her income falls within guidelines.
Orignal From: Tax Question, My mom was awarded money from a malpractice lawsuit for pain and suffering.?
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