Are Personal Injury Settlements Taxable in Washington DC?

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If you are injured in an accident in Washington DC, you may be entitled to make a personal injury claim for medical bills, lost wages, and any emotional distress you suffer. This is money paid to you by the person or company responsible for your injuries. The portion of your settlement attributable to your injury is not taxable in a personal injury claim.

If you have been injured in an accident, contact Chaikin, Sherman, Cammarata & Siegel, P.C. today for a free consultation. We value the attorney-client relationship and will help you through the claims process.

Is my personal injury settlement taxable

Calculating Your Damages

Before we can determine how much of your claim is taxable, we will determine how much you will receive in your settlement by calculating your damages. This will include both economic and non-economic damages.

Economic damages are those that have a specific dollar amount attached to them. This could include:

  • Medical bills – The cost of any medical treatments, therapies, or rehabilitation
  • Ambulatory costs – travel costs to and from medical appointments related to the accident
  • Lost wages – This is the income you’ve lost if you’re out of work or can’t do the same job as before due to the accident
  • Equipment such as wheelchairs or prosthetics
  • Care costs cover the cost of a professional carer or compensation for the time a family member spent caring for you
  • Property damage

Non-economic damages are more difficult to calculate. This could include:

  • Pain and suffering
  • Mental anguish

Medical Expenses

If your settlement or award is meant to cover costs caused by your injury, the expenses are not taxable. Medical bills fall under this category. The general rule is that damages recovered in a personal injury case are not taxable. This includes compensation for medical expenses.

An exception lies, if you claimed a  deduction for a medical bill in your income taxes, and then later receive compensation for that bill, the Internal Revenue Service (IRS) will require you to “recapture” the previously deducted amount by reporting it as taxable income.

Property Damages

Another common type of damage awarded in personal injury claims is property damage. If you are awarded damages for repairing or replacing your vehicle, that amount is not taxable. However, if your property settlement goes above the adjusted basis in the property, any excess is income.

For example, if you get a check that fairly compensates you for the loss of a car you own, you are not likely to pay taxes on your property damage settlement check.

Lost Wages

According to 26 U.S.C. § 104(a)(2) and Commissioner of Internal Revenue v. Schleier, 515 U.S. 323, 329-30 (1995), in physical injury cases, any portion of the recovery for lost wages is not subject to income taxes.

Pain and Suffering and Mental Anguish

Your verdict is non-taxable as long as it arose from a physical injury. If you file a claim for emotional distress or employment discrimination but no bodily injury, your settlement or verdict may be taxable unless you prove that personal physical injuries occurred.

definition of lawsuit

Wrongful Death Claims

Wrongful death claims are personal injury cases brought by the surviving family members of a person who died because of another person’s negligence or intentional actions.

Wrongful death settlements are not taxable in Washington DC. This includes compensation for lost wages, loss of companionship, and pain and suffering.

Punitive Damages

In rare cases, punitive damages may also be awarded. Punitive damages are meant to punish the wrongdoer and are not related to any damages you suffered. The IRS considers these damages as income and is taxable.

Personal Injury Settlements

For more than 50 years, the Washington, D.C. personal injury lawyers of Chaikin, Sherman, Cammarata & Siegel, P.C. have successfully represented individuals and families who have been injured or lost loved ones due to someone else’s negligence. Here is a small sample of some of our successful verdicts and settlements: 

  • $15 million for a woman who was permanently paralyzed from the neck down due to being struck by a stray bullet.
  • $6 million on behalf of a man who suffered a brain injury due to a rear-end collision.
  • $5 million medical malpractice settlement on behalf of a 14-year-old client who suffered a severe brain injury due to a doctor’s inappropriate use of a chemical product.
  • $4.8 million on behalf of a severely injured man when his motorcycle struck a trailer being pulled by a minivan.
  • $4.5 million for a woman who was seriously injured in a pedestrian accident after being struck from behind by a transit bus in a crosswalk.

See additional examples of our case victories and settlements on our “Case Results” page.

Hire a Personal Injury Lawyer for Your Personal Injury Case

Are Personal Injury Settlements Taxable in Washington DC?

If you are looking for the highest level of representation available for your personal injury case, turn to Chaikin, Sherman, Cammarata & Siegel, P.C. Our firm has helped clients recover more than $500 million in compensation, and we have more than 100 years of combined experience. All of our partners are recognized by Washington, D.C. Super Lawyers®, and our firm includes three past presidents of the Trial Lawyers Association of Metropolitan Washington, D.C.

We work to help our clients obtain fair settlement offers to compensate them for the injuries they’ve suffered, but our attorneys are extremely well-equipped to go to trial if needed. Call (202) 659-8600  or contact us online to get the proven legal representation you deserve.

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