Is money received in lawsuits for physical injury taxed?

Question

and if so what persentage iv had answers from yes to no to it mite be so be spacific and give sources please thanks in advance
$185,000 lawsuit
$129,500 after lawyers fees
???? if it taxed or what and if it is taxed please give a %

Answer 1

Court awards and damages. To determine if settlement amounts you receive by compromise or judgment must be included in your income, you must consider the item that the settlement replaces. Include the following as ordinary income.
Interest on any award.

Compensation for lost wages or lost profits in most cases.

Punitive damages, in most cases. It does not matter if they relate to a physical injury or physical sickness.


Do not include in your income compensatory damages for personal physical injury or physical sickness (whether received in a lump sum or installments).

Emotional distress itself is not a physical injury or physical sickness, but damages you receive for emotional distress due to a physical injury or sickness are treated as received for the physical injury or sickness. Do not include them in your income.

If the emotional distress is due to a personal injury that is not due to a physical injury or sickness (for example, unlawful discrimination or injury to reputation), you must include the damages in your income, except for any damages you receive for medical care due to that emotional distress. Emotional distress includes physical symptoms that result from emotional distress, such as headaches, insomnia, and stomach disorders.

Publication 525
http://www.irs.gov/publications/p525/ar02.html#d0e7963

Answer 2

Sometimes it is, sometimes it isn't - and it's not a percent, it depends on what it's for. If it's compensation for damages, then it's not taxed. If it's for pain and suffering, or for lost wages, then it is.