Skip to main content

Exit WCAG Theme

Switch to Non-ADA Website

Accessibility Options

Select Text Sizes

Select Text Color

Website Accessibility Information Close Options
Close Menu
The Law Offices of Marc L. Shapiro,  P.A.  Your Personal Injury Team.

Do I need to Pay Taxes on A Personal Injury Settlement?

Attorneys at all Naples law firms will tell you that the bulk of personal injury cases are settled before trial. Acceptance of a settlement is fairly simple- once you tell your attorney you’re agreeable to the defense attorney’s offer, your lawyer will help you handle the rest.

The check should be on the way shortly. Once your lawyer’s contingency fees are paid you can get back to living your life.

But what about taxes?

The good news is that settlement funds that are received as part of a personal injury case are not taxable under state or federal law. This holds true regardless as to whether you settled early or if you chose to take the case to trial.

Personal injury damages that meant to compensate for the following things aren’t taxable:

  • Attorney’s fees
  • Lost wages
  • Pain and suffering
  • Medical bills
  • Emotional distress
  • Loss of consortium

Are there any exceptions to this rule?

Yes, there exceptions to the general rule. For example, if your settlement includes punitive damages, those monies will be taxable.

If you’re pursuing punitive damages, be sure to ask your personal injury attorney to have your total award split so you’ll have separate agreements and/or judgments for punitive damages and compensatory damages.

This will help you keep everything straight with the IRS.

You should also know that interest on monies that owed to you as a result of a personal injury claim are also taxable.

For example- if you filed your claim in August 2016 but your case didn’t settle until the following year, and the defendant appealed (and lost) in August 2018, you would be entitled to two years-worth of interest.

Remember, if you use the above example, you can rest easy in knowing that your overall compensatory damages won’t be taxed, but the interest that accrued between the time you filed your case and the time you received your settlement will be.

In closing

If you have more than one claim against the defendant, be sure to have your Naples law firm request that the details of the settlement be fully outlined in the settlement agreement.

This will allow the courts (and the IRS) to know which portion of your settlement relates to a personal injury claim in addition to outlining the part of your settlement that relates to a non-personal injury claim.

If you have questions about how personal injury lawsuits work, call our office today at 239-649-8050 to schedule a free consultation.

Facebook Twitter LinkedIn

The Shapiro Difference

Earning Your Trust

Earning Your Trust Not all attorneys are created equal. Marc Shapiro is reputable, experienced, trustworthy and is committed to both his clients and employees. We want you to be so satisfied with our law firm that you will tell your friends, family and colleagues that “Marc Shapiro is my attorney.”

Communication & Keeping you Informed

We embrace technology and “simplexity.” Our legal assistants, paralegals, and attorneys will guide you through the process and make sure you are informed. We are available 24/7 via text, phone and email and will promptly respond to your inquiry within one business day.

A Strong Office Culture

We believe in growing people. The Shapiro family lives by three principles: Integrity, Communication, and Transparency. We mentor and nurture all levels of staff from interns to executives. A happy office means better service and more productivity for you.

Employing A+ Employees

We look for employees with empathy and problem-solving ability. Our legal assistants, paralegals, & attorneys are bilingual and some even multilingual. Our staff is diverse and we speak Spanish, French, Creole, & German. We want to speak your language.

Grassroots Initiative & Community Engagement

If you aren’t giving back then what are you doing? After the birth of Marc’s child, his life was transformed because of his son’s special needs. Marc routinely gives back to the Juvenile Diabetes Research Fund, volunteers with Autism Speaks and Autism awareness groups and STARability in Naples, Florida.


Get a Complimentary Strategy Session

Our team wants to help. Call or email us for a free consultation so we can evaluate your case and put you on the path to a successful recovery.

Contact Us
Skip footer and go back to main navigation