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Do I Have To Pay Taxes on My Personal Injury Case?

The quick answer is no.  But read on as there are instances in which you may have to pay taxes on a personal injury case.  The Internal Revenue Code, Section 104(a)(2) exempts “income” awards from personal injury and physical sickness awards.  However, it is the substance of the transaction, not the form, or paperwork, that determines whether a settlement or jury verdict is taxable under the law and regulations.  The test is the origin of the claim, or, as the Court in a 1944 case stated, “In lieu of what were the damages awarded?” Read more