Is insurance settlement taxable?

Judy

Usually not, but depends what it's for. A part that' for lost wages, yes.

curtisports2

Settlements for personal injury are not taxable. Personal injury damages that are meant to compensate the claimant for things like lost wages, medical bills, emotional distress, pain and suffering, loss of consortium, and attorney fees are not taxable as long as they come from a personal injury. However, any interest that might be added to the settlement - if it was to be paid in installments, with interest - is taxable income.

StephenWeinstein

Anything you receive for something you deducted on your taxes in an earlier year, either as a medical expense or as a casualty loss, is taxable. Anything you receive for an out-of-pocket expense that you paid and did not deduct on your taxes is not taxable. I don't remember whether money you get for pain and suffering is taxable. Anything you get for lost income that would have been taxable if you had received it is also taxable.

STEVEN F

MAYBE. There are basically 2 types of damages. The portion of the settlement that compensates you for the value of the car and medical costs is not taxable. Any portion of the settlement that is compensation for lost wages (that would have been taxable) or 'punitive damages' is generally taxable. In short, you should consult an attorney to review the settlement and inform you if some of the settlement is taxable.

Richard

A few months ago, I asked a personal injury lawyer that very question, and he said the proceeds are not taxable.

babyboomer1001: Yes, it is.

Yes, it is. :( Sorry.

Anonymous

most likely, yes.