Is the money received from a personal injury case is it taxed?

Answer 1

It kind of depends on the nature of the settlement. Any money received to cover medical bills, pain and suffering and property damage won't be taxed. However, if any of the settlement is to reimburse for lost wages, that portion is taxable. Also, if any part of the settlement is punitive damages (which is basically paid to the injured as a punishment to the person who injured you), is also taxable. If the settlement is received as a lump sum without defining how much was paid for what, I would suggest that person consult a tax attorney or lawyer for more detailed advice.

Hope that helps!

Answer 2

Almost all personal injury cases are settled, and the money is not specified. So, of course, you will claim that it is all for pain and suffering (non-taxable).

If, however, the case goes to a jury, which specifically reimburses you for lost income -- this is taxable.

So, if your case went to verdict, go to a tax advisor to determine what (if any) of the award is taxable.

If not, then you have to decide whether the settlement was for income (report the reimbursement for lost income), or pain and suffering, etc. (not taxable).

Answer 3

according to the internal revenue code, you allowed to recover capital before paying taxes on it. This may be silly, but think of a human as capital. If you injure yourself, you are allowed to recover yourself tax free. Any money awarded for medical expenses and pain and suffering are tax deductable. However, if any money awarded was for punitive damages, all of it will be taxable. i hope this helps!

Answer 4

Compensation money is not taxed generally all over the world. How about USA?
VR

Answer 5

Not usually, unless this was specified in your settlement.