re: Question about settlement and taxes

quote:

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So, are you saying that general damages for pain and suffering, etc., in the case of an insurance settlement via a wreck of this type IS taxable? I was told the same as the OP, in that, these are NOT taxable.

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So here's the thing where people get caught up.

If the physical injuries causes the mental anguish, then the damages paid for mental anguish are NOT taxable.

If the mental anguish is separate and apart from the physical injuries, the related damage payments ARE taxable.

It's going to depend upon the OP's settlement agreement.

Generally speaking, the IRS considers all income taxable, and you have to show why it is not.

I should have been clearer in my original post.