Do We Pay Taxes on Personal Injury Settlements?
Generally, taxes are not paid on personal injury settlements unless the settlement is made for punitive or exemplary damages. Hire a tax attorney or accountant to help figure out personal injury settlements with advice from a lawyer in this free video on taxes.
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You were injured in a motor vehicle accident and suffered personal injury and now you are considering settling your case but you're worried as to whether there are going to be tax consequences if you settle. Hello, I'm Robert Todd and I'm here to answer the question do you pay taxes on a personal injury settlement? Well generally speaking, if the personal injury settlement is compensating you for your physical injuries, the answer is no, that part is not taxable. Now if you have filed a complaint for damages and your complaint asked for punitive or exemplary damages, when you go to settle your case you want to make sure that the release clearly demonstrates that the settlement is for your physical injuries and not for punitive or exemplary damages. If you have a question in that regard, you may want to employ the assistance of someone who is either a certified public accountant or a tax attorney that can differentiate between the physical injuries and the exemplary or punitive damages to make sure that the release is worded properly so that you don't have any tax consequences. I'm Robert Todd and thank you for watching.