Is this money taxed and how?

[ETax847]

A client's child inherited her deceased spouse's workman's comp claim.  Settlement came to the child.  Will this money be taxed to the child, and if so, will it be at the parent's tax rate?

[Abby Normal]

Was it not settled while the estate was still open? Was this a personal injury lawsuit? Is some of the money for back wages?

If it's taxable, it will be at the child's rates. Kiddie tax is just for investment income.

[SaraEA]

Income retains the same character to the beneficiary as it would have been to the deceased.  Worker's comp would not be taxable to the parent and therefore is not taxable to whomever receives it.

[ETax847]

Thanks Sara!