Florida Personal Injury - Is my personal injury settlement taxable?
If you’ve recently been awarded compensation in a personal injury settlement, you may be wondering if the money you received is taxable by law. This guide will outline the different situations and circumstances regarding taxation on settlements.
What is not taxableYou can*t be taxed on money from a personal injury settlement or jury award meant to compensate you for physical injuries, emotional distress caused by physical injuries, or lost wages that result from physical injuries. These are specifically excluded by the IRS.
What is taxableIf you*ve already received some type of tax benefit that relates to your case, you cannot take advantage of additional benefits. If you do, it is referred to as *double-dipping* and is illegal. Furthermore, if you earn any interest on money recovered in a personal injury settlement, the extra accrued income is not tax exempt. This includes interest on your bank account and any investments you make with your settlement money. Punitive damages, or money that you received in order to punish the defendant, are also taxable. Failure to report these types of compensation could result in penalties.
Speak to your attorneyDon*t risk it with the IRS by ignoring these specific taxes! If you are concerned about your settlement and how to report it, talk to a Board-Certified Trial attorney. They will help you navigate the specifics of your settlement and set you on the right course towards responsible tax reporting with regards to your compensation.