I often receive this question from my client long after we close their case. They are typically preparing for tax time and they mention to their accountant that they received some money in a personal injury settlement. The accountant then asks them if the settlement is taxable or considered income.

The client immediately feels a sinking feeling in the pit of their stomach and thinks, “Oh my god! Is Uncle Sam going to treat that settlement money like income and tax me on it?” Most accountants should know the laws around this, but many usually defer to the personal injury attorney to answer the question.

The general answer to the question of whether or not a personal injury settlement is taxable is no. However, this is only true if you sustained a physical injury in the accident and all damages are resulting from the physical injury or injuries you received.

So, all money you received to pay your medical bills, compensate you for lost earnings and pain and suffering all stemming directly from the physical injury you suffered, will not be taxed. As our firm specifically handles only pedestrian, bicycle, motorcycle and auto injury cases, we can confidently tell all of our clients that their settlements are not taxable.

However, if you have a different type of case (one that we do not handle at this office), like an employment case or harassment case, your settlement may be taxable. It is important to discuss these issues with your personal injury traffic accident attorney and your accountant to make sure you plan accordingly.

Accident Client

“Last March, my partner was struck by a vehicle while crossing the street. During this difficult time of healing, we knew that bills were going to pile up and his was going to be a long process. After looking at multiple law firms, we knew that Sally Morin Personal Injury Lawyers was going to be the best place to work with. Lauren and her team were patient, supportive and caring during his difficult time. His schedule was always busy with work and doctor appointments that his main source of communication was through email. Lauren and her team made it to where he didn’t have to worry about anything but just sending over the paper work he got from the hospital, and other bill collectors involving his incident and they worried about the rest.

Because of all their help my partner Aaron, was able to heal with less worries on his shoulders. By end of December, everything was settled and we were pleased with the results. I’d like to give a huge thank you to Lauren & the Sally Morin team. If you’re looking for a law firm for your incident, I’d definitely look at this law firm.”

We're here to help with your Personal Injury claim

Check out our Personal Injury FAQ Page to learn more about how the process works.

We Handle Your Personal Injury Accident Claim So You Can Focus on Your Life

After an injury, contact the attorneys at Sally Morin Personal Injury Lawyers. We handle many areas of the law, including pedestrian and car accidents that involve speeding. We believe you should be able to focus on recovering while we handle the legal details.

We truly care about the people of San Jose and all of California. Contact us today for a

KNOW HOW TO PROTECT YOURSELF AFTER AN ACCIDENT

It is essential to know your rights after a traffic accident so you can protect yourself and the value of your claim.
This guide will help you:

  • 1Know what to do when dealing with insurance claims, police reports and lawyers.
  • 2Avoid making mistakes that undermine the value of your claim
  • 3Put yourself in a position to get the best settlement possible