Are Car Accident Insurance Settlements Taxable In New York?

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Are Car Accident Insurance Settlements Taxable In New York?

Generally, personal injury settlements, including car accident settlements, are NOT taxable.

There are three types of damages you can recover including economic, non-economic, and punitive damages.

According to the IRS, car accident settlements received as a result of physical injuries or physical sickness are exempt from taxation.

Economic Damages

Economic damages for injuries sustained in a car accident are generally NOT taxable and include medical expenses, medical bills, or lost wages. If you previously deducted medical expenses you receive in a recovery from insurance coverage, you must report those expenses as income.

Non-Economic Damages

The non-economic damages you get for emotional distress or mental anguish from a car accident are treated the same as economic damages and are NOT taxable unless previously deducted.

Punitive Damages

Punitive damages awarded as part of your settlement are taxable and are reported as “other income.”

These types of damages are rare in car collision cases.

Should I consult a Long Island injury lawyer if I’ve been injured in a
car accident?

Yes! If you’ve been injured in a car accident, the experienced Long Island personal injury lawyers at Rosenberg & Gluck, L.L.P., can help you. Call (631/516) 451-7900. Attorney Advertising.