Do I enjoy to pay cheque taxes on a lawsuit settlement for personal injury?
Answers:
Punitive damages are taxable.
Reimbursement for medical expenses is only taxable if you deducted the medical expenses.
No, settlements for physical injury or illness are not taxable. The settlement must clearly state that explicitly what it's for.
However if any part of the settlement is earmarked as lost wages, interest, or punitive damages, those portions are fully taxable as commonplace income.
No. My wife was in a desperate car accident and we didn't hold to pay taxes on it.
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