Articles Tagged with taxes on personal injury settlements

I am a Tennessean.  I was received some broken bones in a car wreck earlier this year.   I spent a couple days in the hospital and missed six weeks of work.  The case was just settled and I received a check for a significant amount of money.   Do I have to pay income taxes on the money I received?

No, you do not have to pay federal income tax on the money you received

As of today (and for many, many years) there is a special federal law that permits people who receive money in personal injury cases where there has been physical harm  to exclude the monies received in a settlement or lawsuit from their income for federal income tax purposes.   You do not need to report it to the government and you do not need to report it.

 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.

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