Other party wants to settle with me for injuries sustained in a car collision. Will I be taxed on this settlement?
Years ago, I had a personal injury suit. The other party settled and paid my $20K. My attorney paid me with two checks under $10K and told me that anyone who brings a check of more than $10K to a bank gets reported by the bank to the IRS. Is this the same today, should I have the settlement drawn in separate checks less than $10K to avoid the bank reporting to the IRS?
Personal injury settlements, as long as they are for pain and suffering and not wage replacement, are non taxable. When an attorney handles your personal injury claim they are certain to designate the settlement to pain and suffering and therefore personal injury settlements are a non taxable event.
Deposits by check are not reported. Only cash deposits of $10,000 or more are required to be reported to treasury. Depositing a check "as cash" would trigger this reporting requirement, but if it is a simple regular deposit into your account, there is no report.
My office handles personal injury and accident cases in Massachusetts and New Hampshire.
Law Offices of Andrew D. Myers
North Andover, MA — Derry, NH
CLICK HERE: FREE ACCESS TO GENERAL PERSONAL INJURY WEBSITE:
Damages for personal injury caused by a physical injury are not taxed. I suggest you consult with your current attorney.
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Mr. Lundeen is licensed to practice law in Florida and Vermont. The response herein is not legal advice and does not create an attorney/client relationship. The response is in the form of legal education and is intended to provide general information about the matter within the question. Oftentimes the question does not include significant and important facts and timelines that, if known, could significantly change the reply and make it unsuitable. Mr. Lundeen strongly advises the questioner to confer with an attorney in your state in order to ensure proper advice is received.