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QUESTION DETAIL
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Do you have to pay taxes on a settlement from a medical lawsuit related to physical injuries?
ANSWER
The BIDaWIZ Team's Answer:
We have good news. The medical settlement would not be taxable to you as it relates to personal physical injuries or sickness as referenced in IRS Publication 4345 and the Internal Revenue Code Section 104(a)(2). The only instance in which the settlement would be taxable at least in part is if you deducted medical expenses associated with it in a prior year. Was this the case?
References: IRC Section 104(a)(2); IRS Publication 4345
State: Texas
