just got married and have tax questions about wifes income and how it affects her taxes

“just got married and have tax questions about wifes income and how it affects her taxes”-----> It depends on the situation; if the settlement is regarding a tax-exempt matter, as in the case of physical injury, the settlement received should therefore be tax-free;US tax code excludes from gross income any amounts, other than punitive damages, received as compensation for personal physical injuries or physical sickness. Such proceeds are not taxed regardless of whether they are obtained from a settlement or from a jury trial. The statute excludes both lump-sum amounts and periodic payments from gross income, so annuity payments from a lawsuit settlement would not be subject to federal tax as long as the underlying claim is for physical injury.On the other hand, as said, punitive or disciplinary damages are not exempt from tax. Punitive damages, also known as exemplary damages, are intended to discourage the behavior the defendant engaged in and punish him for that. They are not intended to compensate you. So, claims not stemming from physical injury will not trigger the statute and will be taxed as regular income.

As per personal injury compensation,it will not be added in your tax.It will exclude from the tax.For more information you can contact Manibog Law, PC California.They provide free case evaluation and consultation.