Settlements Taxable?

[Jenni_Pooh2]

What is the name of your state? California

I was injured at work and am now at the "tail end" of the comp claim. It is a large settlement, and because it is also an accumulative trauma accident, there are 4 comp companies involved. I am to receive the first settlement this month, $42K, but am unsure when I will receive the other three, nor do I know what those amounts will be. Will the settlement be taxable? If so, is it taxable to the year I actually received the money? The original accident/claim was in 1998.

Also, I was in a car accident last year (9/03), and will be receiving a settlement for that next month. My auto insurance paid all the medical bills, however, they do not require reimbursement for the medical expense. But the insurance company for the girl that hit me (AAA) is still required to pay me for all medical expenses, so I will be able to keep that money. Would the personal injury and medical expense money be taxable?

 

[Snipes5]

Injury money yes.

Medical expense money, probably not, but if your medical expenses are already covered, that money might be considered taxable.

Snipes

 

[abezon]

Settlements where there is physical injury are not taxable unless the settlement includes punitive damages. If the worker's comp is for a physical injury, that settlement is not taxable. If the accident settlement is for an injury, it is not taxable. Any amounts designated as being for lost wages or punitive damages are taxable.

Your lawyer should be up on this stuff. If you don't have a lawyer, you should at least pay one $100 or so to review the terms.