Do I Have to Pay Taxes on My Personal Injury Settlement?
I received a broken leg in a motorcycle crash and received a settlement from the other driver’s insurance company. Do I have to pay federal income taxes on the money I received?
Not under current federal income tax law. There are certain types of lawsuits that give rise to the duty to report the settlement as income and pay taxes on that income, but those rules do not include monies paid in personal injury cases such as the one you describe.
Tax laws change from time to time. Thus, in the event you receive money in a personal injury case, you should ask your tax advisor if the money you received in the settlement is taxable.
