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IRS Tax Map 2008
Current IRS Tax Map

taxmap/pubs/p3920-001.htm#TXMP0f7085be

Payments to Survivors


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Payments to Survivors

The following section discusses the tax treatment of certain amounts received by survivors.
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September 11th Victim Compensation Fund of 2001


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September 11th Victim Compensation Fund of 2001

Payments from the September 11th Victim Compensation Fund of 2001 are not included in income.
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Qualified Disaster Relief Payments


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Qualified Disaster Relief Payments

Qualified disaster relief payments are not included in income. These payments are not subject to income tax, self-employment tax, or employment taxes (social security, Medicare, and federal unemployment taxes). No withholding applies to these payments.
Qualified disaster relief payments include payments you receive (regardless of the source) after September 10, 2001, for the following expenses.
Qualified disaster relief payments also include the following.
Caution
Qualified disaster relief payments do not include:
  • Insurance or other reimbursements for expenses, or
  • Income replacement payments, such as payments of lost wages, lost business income, or unemployment compensation.
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Disability Payments


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For tax years ending after September 10, 2001, disability payments for injuries incurred as a direct result of a terrorist attack directed against the United States (or its allies), whether outside or within the United States, are not included in income.
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Death Benefits


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Death Benefits

Payments received by an individual or the estate of a decedent from the employer of an employee who died as a result of the Oklahoma City or September 11 terrorist attacks, or as a result of the anthrax attacks, are not included in income. Only the amount that exceeds the benefits that would have been payable if the death had occurred for a reason other than a terrorist or anthrax attack is excludable. However, the exclusion does apply to incidental death benefits paid under a qualified retirement plan even if these amounts would have been payable if the death had occurred for a reason other than a terrorist or anthrax attack.
Deposit
If you included death benefits in income on a previously filed return and they are now excludable under the above rule, file Form 1040X to amend that return. For information on the period for filing Form 1040X, see Period for filing claim for credit or refund earlier under Refund of Taxes Paid. If that period has expired, you are granted an extension. You have until January 22, 2003, to file Form 1040X to exclude the death benefits. On top of page 1 of Form 1040X, write "Extension of Limitations Under PL 107–134, sec. 102(b)(2)."
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Canceled Debt


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Canceled debt is not included in your income (or the income of the estate) if:
The lender is not required to report the canceled debt on Form 1099–C, Cancellation of Debt.
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Payments to Survivors of Public Safety Officers


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Payments to Survivors of Public Safety Officers

If you are a survivor of a public safety officer who died in the line of duty, certain amounts you receive are not included in income.
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Bureau of Justice Assistance payments.


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If you are a surviving dependent of a public safety officer (law enforcement officer or firefighter) who died in the line of duty, do not include in your income the death benefit paid to you by the Bureau of Justice Assistance.
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Government plan annuity.


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If you receive a survivor annuity as the child or spouse (or former spouse) of a public safety officer who was killed in the line of duty, you generally do not have to include it in income. This exclusion applies to the amount of the annuity based on the officer's service as a public safety officer.
For this purpose, the term public safety officer includes police and law enforcement officers, firefighters, and rescue squad and ambulance crews.
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More information.


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For more information, see Publication 559.