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fmccord
New Member

Does an insurance settlement affect my taxes?

]Does an insurance settlement affect my taxes?
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4 Replies
TomD8
Level 15

Does an insurance settlement affect my taxes?

It depends.  Property insurance and medical insurance settlements are not taxed.  Life and disability insurance claims may be taxed.  Lawsuit proceeds may be taxed.

 

We need more information to answer your question specifically.

**Answers are correct to the best of my ability but do not constitute tax or legal advice.
fmccord
New Member

Does an insurance settlement affect my taxes?

My 82 year old wife was knocked over by a cashier in a retail establishment.

That resulted in a broken femur. Surgery, months of physical therapy, etc.

Her attorney mentioned a possible 5 figure settlement.

That's the reason for my question.

Thank you all for your help.

Cheers,

Fred

 

 

TomD8
Level 15

Does an insurance settlement affect my taxes?

A lawsuit settlement (other than punitive damages) for "personal injuries or physical sickness" is not subject to federal income tax.

https://www.irs.gov/government-entities/tax-implications-of-settlements-and-judgments

**Answers are correct to the best of my ability but do not constitute tax or legal advice.
fmccord
New Member

Does an insurance settlement affect my taxes?

Thank you Tom.

 

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