Can Your Personal Injury Settlement Be Taxed?

Can Your Personal Injury Settlement Be Taxed?

September 11, 2020 Off By Glespynorson

You have gone through a lot of pain from a personal injury claim. It has been a tough process but you made it through and finally received your settlement. Now you wonder, is a personal injury settlement taxable?

A personal injury lawsuit will hopefully help you get money from a personal injury. Everyone wonders about taxes and we all want to make sure we save enough to pay whatever is due. So, let’s find out if you will owe anything from that claim for taxes.

Is A Personal Injury Settlement Taxable?

This may seem like a straight forward question but if you have never looked up what has to be paid and what does not have to, according to the IRS, you should try to read through the documentation.

It is not as easy as one might think initially. It would seem you do not have to pay taxes on a personal injury claim, however, there are several caveats to that. If you had medical expenses that provided some type of tax relief, you must include that in your reported income.

If you have any emotional or mental distress from your physical persona injury, it is treated the same way but if the money you receive from that does not come from a personal physical injury you have to that in your income.

How A Lawyer Can Help

Usually, the IRS cannot touch the money from a personal injury settlement. As you can see above, there are situations in which it can happen, so you need the right lawyer who will not only fight for the personal injury claim but will tell you how this is navigated for tax time!

You need a good lawyer when it comes to these types of cases. This is a serious time and you need a lawyer who will be upfront with you about your options for a personal injury claim and one who will guide you on the best path financially.

It is bad enough that you have had to fight a personal injury lawsuit. Now you do not want to give up a portion of what you have received to the IRS.

Navigating Muddy Waters

Trying to read through all of the government tax languages regarding what you might and might not have to pay for a personal injury settlement is a ridiculous task. It can be like trying to see through muddy water. Luckily, lawyers are used to reading the IRS guidelines and will know the best route to take.

Is a personal injury settlement taxable? The short answer is no. Although there are stipulations as noted above that show sometimes you will have to pay a portion of what you have received from your personal injury claim.

If all of this seems confusing, that is because it is! Legal matters become tough to figure out and a good lawyer is always the best option when trying to fight any legal battle. Never take the fight on alone. Follow us for more tips like these!