Is my personal injury settlement taxable?
Is my personal injury settlement taxable?
A personal injury settlement might be taxable income, depending on your situation and the circumstances of your case. If you received a personal injury settlement as part of a lawsuit or claim, then you should expect that some portion of your settlement is taxable income.
In general, your settlement is taxable if it was the result of a physical injury, emotional distress, or "pain and suffering" (which is defined as any physical or emotional pain associated with an injury). The money you receive in a settlement is classified as either "damages" or "income"—it depends on how you used the proceeds from the lawsuit.
Damages are used to compensate victims for their injuries and/or related expenses. They could be in the form of money, medical bills paid on behalf of the victim; lost wages; costs associated with hiring someone to do housework or childcare so that the victim can heal more quickly, etc. Damages are not taxable because these funds were directly spent on items related to recovering from an injury. In other words, damages cover expenses that were incurred due to physical injuries sustained from a car accident, dog bite, slip, and-fall in a grocery store parking lot, etc.
If you received a settlement for an injury or illness, it's important to understand how taxes affect that money. Whether or not you have to pay taxes on your personal injury settlement depends on a few factors, such as whether the settlement was related to your job; whether the case went to trial or mediation, and where you live.
If you have any questions or in need a Personal Injury Attorney, we have the Best Attorneys in Utah. Please call this law firm for free consultation.
Ascent Law LLC
8833 S Redwood Road Suite C
West Jordan UT 84088
(801) 676-5506
