What Makes Personal Injury Settlements Taxable?
The vague feelings of dread that accompany tax season might be especially intense if you’re wondering if your personal injury settlement is taxable. Federal tax laws specifically address what circumstances make personal injury settlements taxable.
The good news is that you may not have to pay taxes on a personal injury settlement. However, the bad news is that there are a few circumstances where the IRS may be entitled to some of what you receive from the insurance company. The IRS website has more information on personal injury settlements and federal taxes.