Are Emotional distress or mental anguish settlements taxable?

Are Emotional distress or mental anguish settlements taxable?

The proceeds you receive for emotional distress or mental anguish originating from a personal physical injury or physical sickness are treated the same as proceeds received for Personal physical injuries or physical sickness above. 

BUT 

If the proceeds you receive for emotional distress or mental anguish do not originate from a personal physical injury or physical sickness, you must include them in your income. However, the amount you must include is reduced by: 
(1) amounts paid for medical expenses attributable to emotional distress or mental anguish not previously deducted 
(2) previously deducted medical expenses for such distress and anguish that did not provide a tax benefit. Attach to your return a statement showing the entire settlement amount less related medical costs not previously deducted and medical costs deducted for which there was no tax benefit