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Are Car Accident Settlements Taxable

In this video, attorney Ted Spaulding explains whether or not car accident settlements are taxable in the state of Georgia. 

Are car accident settlements, taxable? Hi, I’m Ted Spaulding, an Atlanta personal injury trial lawyer, and the founder here at Spaulding Injury Law. So, this is a question obviously that comes up at the end of a case. You’ve got a settlement, you’ve got a verdict from a jury, and your lawyer is getting ready to disperse monies. And the question is the money that you’re getting for your pain and suffering, and other damages that you’re taking home with you, is that taxable? Well, your lawyer, unless they’re also a tax lawyer, for some reason, and a personal injury lawyer, I’m certainly not, cannot give you legal advice on that because they’re not tax professionals. What I tell people is, at the beginning of the following year when you’re gonna be filling out taxes, so if you get a settlement or a verdict, and you receive monies in let’s say 2020, in 2021, when you go to file your 2020 taxes, you’re gonna want to have a tax professional CPA tell you, “Hey here’s, Mr. CPA, what I received, and why I received it, is that taxable?”

What I’ve heard from tax professionals, and again, this can change over time. So, why it’s not legal advice, and you’ve got to go to the actual professionals, is typically it’s not taxable if there is no lost wage component to what you’re receiving. So, either you never had lost wages as a claim, or you did, but didn’t receive monies for that claim. That’s because the only part that’s income, under the tax law is, from what we understand, is what you’re getting paid for wages.

So, that is what my understanding is from some tax professionals. Again, that can change, so you’re gonna wanna get the updated law before you file taxes. But that is the typical response that I hear when clients do reach out to their CPAs. I hope this helps. If you have any questions, or you have a potential case you would like to see if my firm can handle, respond to this video. Go to my website spauldinginjurylaw.com. There’s a contact form on there that you can fill out. We’ll reach out to you. Or call me. I got two phone numbers, 770-744-0890 or 470-695-9950. Thanks so much for watching this video.