Is Settlement Money Taxable?

by Victoria
(Colchester VT US)

Is the money that you receive from a settlement for an injury taxable? And if so how much? Thanks for any info you can give.

Visitor Question:
Disclaimer: Information provided in our response is NOT formal legal advice. It is generic legal information based on the very limited information provided. Under no circumstances should the information in our response, or anywhere else on this site be relied upon when deciding the proper course of a legal matter. Our response does NOT create an attorney-client relationship. Always get a formal case review from a licensed attorney in your area.

ANSWER for "Is Settlement Money Taxable?":

This is an excellent and common question. Settlement money that is attributed to physical injury, pain and suffering is not taxable because it is not considered "income." Settlement money that is identified as income replacement or lost wages is taxable just as income you would have actually received would be.

This is why the language of a settlement release must be accurately drafted.

The above is general information. Laws change frequently, and across jurisdictions. You should get a personalized case evaluation from an attorney licensed in your state. Find a local attorney to give you a free case review here, or call (888) 647-2490.

Best of luck,

Judge Calisi

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TYPE OF ACCIDENT
AUTO ACCIDENT
PERSONAL INJURY
WORKERS COMPENSATION
MEDICAL ERROR
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