Gareth Keenan
01-30-2012, 12:58 PM
So, one of the appeals of a structured settlement is that for the plaintiff, interest earned on an annuity is tax free. How does that work exactly?
Like, does the insurer purchase the annuity to fund the structured settlement, transfer ownership to the plaintiff, and each subsequent annuity payment(everything other than the first payment) are tax free? So, does this mean if you receive a structured settlement as compensation for a claim, everything other than the first payment is tax free? Specifically, you would not need to document the subsequent payments on your annual taxes?
I'm also assuming that the annuity is only tax free at the federal level, but I suppose it could also be at the state level. Any one know if it is?
Cheers,
Gareth Keenan
Like, does the insurer purchase the annuity to fund the structured settlement, transfer ownership to the plaintiff, and each subsequent annuity payment(everything other than the first payment) are tax free? So, does this mean if you receive a structured settlement as compensation for a claim, everything other than the first payment is tax free? Specifically, you would not need to document the subsequent payments on your annual taxes?
I'm also assuming that the annuity is only tax free at the federal level, but I suppose it could also be at the state level. Any one know if it is?
Cheers,
Gareth Keenan