Do I have to report money received from a settlement of a personal injury claim to the IRS or to the state of Arizona?

Asked over 1 year ago - Phoenix, AZ

If so, what portion/ percentage is taxable?

Attorney answers (6)

  1. Jeffrey Ira Schwimmer

    Contributor Level 19

    9

    Lawyers agree

    Answered . Monies obtained as compensation in settlement (or verdict) of a personal injury claim are not taxable as income under the federal code. Each state's tax laws may be different, although many States follow the federal guideline on this point (New York, for example, also does not tax these monies).

  2. J. Thomas Smith Ph.D.

    Pro

    Contributor Level 20

    8

    Lawyers agree

    Answered . When you receive payments received as compensation for physical injury or physical sickness, they are federal-income-tax-free. The same is true for compensation for emotional distress that evolves from the physical injury or sickness. The distress you experience is considered a part of the physical injury or sickness. However, the amount you claim on your taxes as a medical expense deduction that is later reimbursed as part of your settlement, must be reported as income on your return. DO consult with your tax professional about how this will affectyour specific situation.
    on your tax return.

    Law Offices of J Thomas Smith J.D., Ph.D 11500 Northwest Freeway, Suite 280 Houston, TX 77092 713-LAWYER-2 www.... more
  3. Rebecca Lynne Melone

    Contributor Level 12

    7

    Lawyers agree

    Answered . Certain portions of a personal injury award can be taxable as income. Generally, amounts awarded for the physical injury or sickness are not taxable, but punitive damages or awards for pain and suffering are taxable as income.

  4. Paul E Knost

    Contributor Level 16

    5

    Lawyers agree

    Answered . The comments that all of my colleagues posted also apply here in Arizona. Money that you received as compensation for pain and suffering, you do not have to pay taxes on. Money that you received for lost wages and/or punitive damages, you would have to pay taxes on.

    NONE OF THE INFORMATION PROVIDED HERE IS MEANT AS, NOR INTENDED AS LEGAL ADVICE. THE LAW IS CONSTANTLY... more
  5. George Costas Andriotis

    Contributor Level 20

    6

    Lawyers agree

    Answered . I will defer to AZ attorneys but in Florida you do not have to claim an injury settlement.

    Call for a free consultation at 727-937-1400 or visit us on the Web at www.serviceandjustice.com.
  6. Christian K. Lassen II

    Pro

    Contributor Level 20

    6

    Lawyers agree

    Answered . Pain and suffering is not subject to tax, but the lost wages component is subject to tax.

    Only 29% Contingency Fee! Phone: 215-510-6755 www.InjuryLawyerPhiladelphia.com

Can't find what you're looking for? Ask a Lawyer

Get free answers from experienced attorneys.

 

Ask now

27,922 answers this week

3,024 attorneys answering

Ask a Lawyer

Get answers from top-rated lawyers.

  • It's FREE
  • It's easy
  • It's anonymous

27,922 answers this week

3,024 attorneys answering