Trusted Representation In Florida Since 1987

Is a Florida personal injury settlement taxable?

On Behalf of | Mar 11, 2023 | Personal Injury |

If a Florida motor vehicle collision caused by driver negligence results in injuries, fatality or property damage, the individual or parties afflicted may seek financial recovery for their losses in civil court. When severe injuries occur, this often results in expensive medical treatments for a recovering victim, such as physical therapy or nursing assistance at home. As part of litigation or in conjunction with out-of-court negotiations, a claimant may agree to a structured settlement. However, some people hesitate, fearing that their personal injury settlement may incur high taxes.

A structured personal injury settlement awarded for physical injuries is not taxable under the Internal Revenue Code. In certain circumstances, such as when financial recovery includes punitive damages or when settlement funds have accrued interest, taxes may apply. With a structured settlement, a recovering victim receives an agreed-upon sum of money, distributed through payments over a period time, or indefinitely.

Structured personal injury settlements are helpful when damages are catastrophic

If an individual suffers a traumatic brain injury, a spinal cord injury or other catastrophic condition because of a motor vehicle collision in Florida, continued medical care and specialized treatments and support may continue weeks, months or longer. A structured settlement plan is helpful in these circumstances because it provides a steady stream of compensation rather than a lump sum. Such settlements may include millions of dollars over time, particularly if a permanent disability resulted.

Clarify state and federal laws before seeking justice after a Florida car accident

Litigation or negotiations regarding a personal injury suffered in a Florida motor vehicle collision are stressful and complex. A recovering victim may access numerous resources available to provide support. These resources could include therapists to help a person deal with emotional trauma associated with an accident, as well as trusted friends and family members, financial advisers and legal advocates, who can act on behalf of a plaintiff in court or while negotiating a settlement out of court.


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