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Seasoned Sacramento Injury Attorneys

Do I Have to Pay Tax on a Personal Injury Award?


Although California doesn't typically tax personal injury awards or settlements, it depends on how the settlement is structured.

Usually, a personal injury lawsuit settlement will compensate you for both economic and non-economic losses like pain and suffering or loss of consortium. The money meant to cover your economic losses – like medical bills, lost wages, etc. – is usually not taxed by the IRS. However, if the amount of your settlement exceeds the amount of your economic losses, it’s considered taxable income. This means that if you received any money that was meant to cover your non-economic losses, you may have to pay taxes on it.

In some cases, you may be able to negotiate the structure of your settlement with an insurance company or the other party in order to reduce the amount of taxes owed. An experienced personal injury attorney can help you understand how this works and determine if it is a viable option for you.

Ultimately, it's important to realize that personal injury settlements – or, at least portions of them – can be taxed. By understanding the tax implications of your settlement and consulting with a qualified professional, you can ensure that you don't end up paying more taxes than necessary.

Contact Us for Help with Your Personal Injury Claim

If you have any other questions or concerns, it's always best to speak with an experienced lawyer. A personal injury attorney can provide you with the legal advice and guidance you need to understand the taxation of personal injury awards in California.

They can also represent your interests in settlement negotiations, ensuring that you receive an amount that is fair and just for your losses. Don't hesitate to reach out for help – it's important to protect yourself and get the money you deserve.

For more information about pursuing a recovery for your personal injury claim, contact Smolich and Smolich online today.