Do you have to pay any sort of taxes on a personal injury award? How? 19 Answers as of August 25, 2015

My mother has been informed that she does not have to pay taxes, but we would like verification. My mother was awarded a personal injury amount under $20,000. She is retired and was wondering if she needs to pay taxes on this lump sum?

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Richard B. Jacobson & Associates, LLC | Richard B. Jacobson
I believe I answered this same question about half an hour ago. Neither the law nor the advice have changed.
Answer Applies to: Wisconsin
Replied: 8/11/2015
Law Ofices of Edwin K. Niles | Edwin K. Niles
Unless part of the settlement is for loss of earnings, there are no tax consequences.
Answer Applies to: California
Replied: 8/11/2015
S. Joseph Schramm | Joseph Schramm
Ordinarily, money received as compensation for injuries sustained in a personal injury suit is not taxable as it is considered money that is intended to make a person whole for something taken away from them.
Answer Applies to: Pennsylvania
Replied: 8/11/2015
Ty Wilson Law | Ty Wilson
If you are concerned about taxable income you should speak with a CPA or tax professional. Typically you are not taxed on personal injury matters however, if there was any lost wages which were paid, then those would be taxable. Good luck.
Answer Applies to: Georgia
Replied: 8/11/2015
Andrew T. Velonis, P.C.
Andrew T. Velonis, P.C. | Andrew Velonis
No, she does not have to pay taxes, it is not income, it is comensation for a loss. She doesn't even report it. Look at it this way: suppose someone crunches up the fender of your car and the insurance company pays $500 to get it fixd. That's not income because all you got was the fender restored to the condition it was in before. Same thing here: your mother has pain and suffering and now 20G to offset it.
Answer Applies to: New York
Replied: 8/11/2015
    End, Hierseman & Crain, LLC | J. Michael End
    Personal injury recoveries are generally not taxable. The person you mother spoke with was correct.
    Answer Applies to: Wisconsin
    Replied: 8/11/2015
    Gregory M Janks, PC
    Gregory M Janks, PC | Gregory M Janks
    Generally personal injury recoveries are non-taxable, but there can be exceptions depending on if there was some type of recovery for economic damages, such as wage loss, etc. It is best to review the Release that the defendants sent to allow the settlement and show same to a tax professional/CPA to get specific advice on the specific case.
    Answer Applies to: Michigan
    Replied: 8/11/2015
    James E. Hasser, Jr. P.C.
    James E. Hasser, Jr. P.C. | Jim Hasser
    Generally speaking the injury part of the award in not taxable, but you need to consult the lawyers that got you the award and you may also want to consult your accountant and maybe even a tax lawyer. Good luck.
    Answer Applies to: Alabama
    Replied: 8/11/2015
    Ronald K. Nims LLC | Ronald K. Nims
    The portion of a personal injury award that compensates for pain and suffering and loss of bodily function and reimburement of expenses (doctor bills, etc.) is always tax free. If any portion is for damage/loss to property (say your car was damaged), that can be taxable as a sale of the property. Since the payment is usually less than you paid for the car, there is no gain on the sale, also if you replaced the property, it's probably tax free. If any portion is for lost income or punitive damages, that is always taxable income.
    Answer Applies to: Ohio
    Replied: 8/10/2015
    Sarrail, Castillo & Hall, LLP | Monica Castillo
    It depends on how the Settlement Agreement and/or possibly the check itself are worded. You should consult with a local attorney and/or CPA.
    Answer Applies to: California
    Replied: 8/10/2015
    Adler Law Group, LLC
    Adler Law Group, LLC | Lawrence Adler
    If the settlement does not specify specific amount for lost wages the settlement is generally not taxable.
    Answer Applies to: Connecticut
    Replied: 8/10/2015
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