does the internal revenue service tax a settlement created by a personal injury suit?

Suwanee Personal Injury Lawyer

Settlements for physical injury or illness are not taxable. However if any part is earmarked for lost wages, interest, or punitive damages those portions are fully taxable as ordinary income.

Some attorneys are not aware of the tax implications on settlements. If it’s a settlement for physical injury or illness, have your attorney push for a flat settlement amount for the injury WITHOUT classifying any of it for lost wages, interest, punitive damages, etc. That way the entire amount will be tax free.