the settlement didnt even cover the entire cost of the medical bills. we had a pay the attorney from the settlement money. so basically we were left with barely anything. do i even have to pay taxes on it?
2007-12-10 04:03:25 · 3 answers · asked by Anonymous in Business & Finance ➔ Taxes ➔ United States
Settlements for physical injury or illness are not taxable. If any portion was earmarked for lost wages, interest, or punitive damages, that portion is taxable.
2007-12-10 04:08:13 · answer #1 · answered by Bostonian In MO 7 · 2⤊ 0⤋
It depends on where you live and what your tax laws are, but generally, no, lawsuit and insurance settlements are not taxable because they are compensating you for actual loss you have sustained. Future investment income earned on the settlement would, of course, be taxed.
2007-12-10 12:07:54 · answer #2 · answered by PhotoJim 4 · 0⤊ 0⤋
In the U.S., it is not taxable because it is restoring you to a position you were in before the loss. In other words, there is no "gain" to you because it is putting you back where you were before the loss occurred.
2007-12-10 12:13:02 · answer #3 · answered by Anonymous · 1⤊ 0⤋