The bartender who was beaten up by the off duty Chicago police officer was awarded $850,000 in damages against the City.
Does she have to pay any kind of taxes on that?
I don’t know if the laws vary by state, but in New York, personal injury awards are tax-exempt.
Cite: Personal experience.
Depends on the jurisdiction, but a good rule of thumb is damages awarded can properly be taxed if they are in fact “income”. Damages for medical bills, property damage etc will usually not be, while damages for recovered income or loss of profit usually are although as tax law is without fail a most Byzantine area there will undoubtedly be about 7084 exceptions.