Lawsuit settlements from car accidents are generally not treated as taxable income. The IRS does not treat personal injury settlements, including those from accidents in a car, as income that is taxable. However, if the settlement includes payments that include compensation for lost wages or punitive damages, those may be subject to taxation.
I doubt it was compensation for lost wages or punitive damages, it was probably just personal injury settlements, which are not taxable.
Thank you,
John
CPA
