If you get money for pain and suffering from a lawsuit, do you have to pay taxes on it?
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If you get money for pain and suffering from a lawsuit, do you have to pay taxes on it?
Asked on October 23, 2012 under Personal Injury, Texas
Answers:
Richard Weaver / The Weaver Law Firm
Answered 11 years ago | Contributor
A financial recovery resulting from a personal injury incident should be tax ecempt. Consult for your CPA or tax professional for additional comment.
Robert Slim / Robert C. Slim - Attorney at Law
Answered 11 years ago | Contributor
The Internal Revenue Code specifically exempts any proceeds from a personal injury claim as taxable income. That includes the entire settlement proceeds, whether it consists of medical expenses, lost wages, or pain and suffering. But always check with your tax professional as the federal income tax laws do change quite frequently. As for state income tax, that issue would differ from state to state.
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