Is Compensation from a Personal Injury Settlement or Judgment Taxable in Iowa?

If you’ve been injured in an accident, whether it’s a car, truck, bicycle, motorcycle, or pedestrian accident, you may be wondering if the compensation you receive is taxable.  In most cases, the answer is no.  Generally, compensation for personal injury cases is not taxable, and this applies to a variety of compensable damages, such as medical expenses, property loss, pain and suffering, loss of function, and loss of consortium.  This applies to both federal and Iowa state taxes.   

While most compensable damages are not taxable in personal injury settlements or judgments, there are exceptions.  For instance, if your settlement or judgment compensation includes lost wages for missed time from work, those amounts are taxable.  Similarly, punitive damages, which are awarded to punish the defendant, are also subject to taxation. 

If you receive a judgment or settlement from a personal injury accident, it’s important that you understand what needs to be reported to the IRS to avoid any tax issues.

If you’ve been injured in an accident, working with an experienced personal injury attorney can help ensure that you receive the full compensation you’re entitled to while navigating the complexities of the legal process. Call the Crimmins & Kehm Law Firm at 515-573-2191.