Is My Settlement Taxable?

attorney Dan Schwartz today we're going

to answer a viewer question from Bob in

Wilmington Delaware bob says I was in a

car accident

I got a settlement my attorney did not

tell me if I need to pay taxes on this

and now I find out he's disbarred can

you tell me if I need to pay taxes on

the settlement proceeds from my personal

injury case but the answer is this is

not legal advice the answer is if you

want me to I'll be happy to review your

settlement documents if a lawsuit was

filed I'll be happy to review the

complaint I'll be happy to look at

whatever you have and try and answer

your question with some specific details

but what I can tell you is generally

speaking personal injury settlement

proceeds are not taxable if they are

proceeds for bodily injury compensation

for bodily injury or sickness as a

result of a car accident or a slip and

fall if you want to take a look at

something on the internet the IRS has a

publication it's called publication

43-45 titled settlements taxability will

link to it in the video blog show notes

so that you can check it out

but what I can tell you is generally

speaking the proceeds of a settlement

for a bodily injury or personal injury

claim where there's proceeds the money's

coming to you to compensate you for your

pain and suffering due to physical

injuries generally speaking that's not

going to be taxable there are exceptions

to that rule several exceptions I'll

give you one example of an exception to

the rule if you filed a lawsuit and you

claimed that the at-fault driver was so

was acting so terribly that you should

be awarded punitive damage

is and then you got compensated for your

bodily injuries your pain and suffering

and in addition you got compensated for

punitive damages to punish the wrongdoer

or make an example of the wrongdoer

there's punitive damages are probably

taxable so to give you specific legal

advice you're going to come in I'll give

you a consultation we can figure out the

taxability of the settlement and

generally speaking this is how it works

thanks for asking the question is very

insightful if you have questions for me

about the law as it relates to personal

injury claims automobile accidents slip

and fall cases dog bite injuries medical

malpractice send me an email my name is

Ben Schwartz I'm an attorney in Delaware

and Maryland my email address is Ben

Schwartz at schwartz and schwartz calm