No. Generally, you do not report money you receive from a personal injury settlement on your tax return.
There are a few exceptions described in this extract of an IRS document:
Personal physical injuries or physical sickness
• If you receive a
settlement for personal physical injuries or physical sickness and did not take
an itemized deduction
for medical expenses related to the injury or sickness in prior years, the full
amount is non-taxable. Do
not include the settlement proceeds in your income.
BUT
• If you receive a
settlement for personal physical injuries or physical sickness, you must
include in income that portion
of the settlement that is for medical expenses you deducted in any prior
year(s) to the extent the
deduction(s) provided a tax benefit. If part of the proceeds is for medical
expenses you paid in more than
one year, you must allocate on a pro rata basis the part of the proceeds for
medical expenses to each of
the years you paid medical expenses. See Recoveries in Publication 525 for details on how to
calculate the amount to report. The tax benefit amount should be reported as
“Other Income” on line 21
of Form 1040.
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Yes
No
