This is a question that is often asked by many: Is Personal Injury Insurance Settlements Taxable?
Generally any income that is received will be subject to tax. Income is basically defined as anything that adds to your wealth. This isn’t limited to money alone. In general, settlements are taxable with the exception of a few specifics. This is determined on the basis whether the settlement complies with the new requirements as laid down by law.
This has mainly to do with the fact that the injury must be of a physical nature. It is however more complicated than just this. They weigh other factors in to ascertain whether your settlement is taxable even if it is a personal injury.
With all the factors to keep in mind to determine whether the settlement is taxable or not it is better to play it safe than paying taxes when you don’t expect it.
The lawyer who helps you with determining the settlement amount might not be a tax specialist, therefore we strongly recommend that you consult a tax specialist in order for them to help you with the personal injury settlement tax implications.
