Published on:

Are Car Accident Case Settlements Taxable?

Are Car Accident Case Settlements Taxable?
Many times car accident claims result in settlements to injured parties.  This money is intended to make the claimant whole again.  Of course, that is not possible, but the system is designed with this goal in mind.
are car accident case settlements taxable?
These settlements often provide compensation for lost wages, loss of earning capacity, pain and suffering, payment for outstanding medical bills, etc.  But is this money taxable?  As is the case with workers compensation cases, the answer is no, but there are some exceptions.
The position taken by the IRS is that any compensation you receive for personal injury or illness is not considered taxable income.  One exception is for punitive damages, which the IRS considers to be taxable income to the person or company that receives it.  Another exception is if on a prior tax return you claimed a deduction for medical expenses related to the accident, and you receive a settlement, then you may be subjected to taxes on such money.  Additionally, if the settlement of a personal injury claim contains a confidentiality clause, then such monies may be considered to be income by the IRS.

Boston Car Accident Attorney

If you find yourself needing a car accident attorney located in Boston, we encourage you to call us today for your free, no-obligation consultation.  We only get paid if we win your case!
 
 

Raving Fans
★★★★★
"I find Christopher Earley to be one of the most professional and compassionate attorneys I have ever met. After having a personal injury, what you need is expertise, experience, and especially compassion and kindness. All of these things define Christopher Earley. I highly recommend Christopher Earley and The Earley Law Group Injury Lawyers to anyone that needs a personal injury attorney!" Susan N.
★★★★★
"Great help with my case. Responses are fast and make me feel very well represented. This man is the guy to call." Hugh R.
★★★★★
"Chris helped me with an extremely difficult time in my life due to a car accident. Even after the settlement, he continued to advocate for me when I was receiving collections notices that were not valid. You can feel assured he will do a great job." Angela C.
Contact Information