Do I have to pay Taxes on it?
2007-06-28 02:59:18 · 7 answers · asked by steppy 2 in Business & Finance ➔ Taxes ➔ United States
I was in a car accident and the settlement is for the bills and physical threpy as well as compensation for lost time. . . . if that helpes any further.
2007-06-28 03:26:14 · update #1
It depends, so check with your accountant!
I think a legal settlement or court award is only tax free if paid for physical injury or physical sickness (medical expenses included).
Ordinary taxable income includes: interest paid on any legal settlement or court award, compensation for lost wages or lost profits (in most cases), punitive damages, patent or copyright infringement, breach of contract; or interference with business operations - because these would all normally be taxable income.
Emotional distress may be taxed.
2007-06-28 03:13:03 · answer #1 · answered by PK 5 · 1⤊ 1⤋
Normally settlements are worded to compensate the injured party for medical bills, pain and suffering all of which are nontaxable. However, if specifically outlined in the settlement an amount is declared payment for loss of wages then it is taxable.
2007-06-28 03:58:58 · answer #2 · answered by Zinger 6 · 0⤊ 2⤋
The part that's compensation for lost time is taxable. The part that's reimbursement for medical bills, therapy costs or car damage isn't taxable.
2007-06-28 04:08:53 · answer #3 · answered by Judy 7 · 0⤊ 1⤋
Compensation is not taxable,
its not considered earning
2007-06-28 03:06:02 · answer #4 · answered by t-bone 5 · 0⤊ 2⤋
Yes, unless it was a medical issue I believe.
2007-06-28 03:07:16 · answer #5 · answered by K 3 · 0⤊ 3⤋
No.
2007-06-28 11:07:21 · answer #6 · answered by acmeraven 7 · 0⤊ 0⤋
yes.
2007-06-28 03:02:37 · answer #7 · answered by Anonymous · 0⤊ 4⤋