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Ray
Ray, Lawyer
Category: Legal
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Experience:  30 years in civil, probate, real estate, elder law
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IRS taxes recently in 12/2015 received settlememt injury law

Customer Question

IRS taxes recently in 12/2015 received settlememt for Personal injury law suit.
1. Are the funds taxable?
2. Can I claim the counsel fees and cost of filing of court fees & filing of $ 1,832.00
3. Settlement was 150 thousand . With one third to counsel of $49,389.33
Submitted: 1 year ago.
Category: Legal
Expert:  Ray replied 1 year ago.

Hi and welcome to JA. Ray here to help you today

In NJ here as a general rule, the proceeds received from most personal injury claims are not taxable under either federal or state law. It does not matter whether you settled the case before or after filing a lawsuit in court. It doesn’t matter if you went to trial and won a verdict. Neither the federal government (the IRS), nor your state-NJ, can tax you on the settlement or verdict proceeds in most personal injury claims. Federal tax law, for one, excludes damages received as a result of personal physical injuries or physical sickness from a taxpayer’s gross income.

Unless there was a trial here and recovery was for breach of contract or punitive damages again it is not taxable.A settlement here would not be taxable.

Here you keep the settlement tax free , no write offs but nothing is taxed it is your money to spend or save or whatever here.

I appreciate the chance to help you today.Thanks again.

Reference

http://www.nolo.com/legal-encyclopedia/is-your-personal-injury-settlement-taxable.html