Will the settlement I get from a car crash be taxable?

Q. I’m expecting to receive a settlement from an auto accident. How would those funds be taxed? — Recovering A. We hope you weren’t injured in the accident and that this settlement will make you whole. There are five different types of settlements as a result of an auto accident: 1. Reimbursement for physical damages to your car; 2. Reimbursement for lost wages; 3. Medical reimbursement for bodily injury to yourself; 4. Reimbursements for pain and suffering due to your physical injuries; and 5. Punitive damages. If your car is damaged in an accident and you receive compensation for those damages, that payment is not income for tax purposes, said Bernie Kiely, a certified financial planner a

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Phone: 973-455-1894 | 51 Dumont Place, Morristown, NJ 07960 | Get directions!

Kiely Capital Management offers financial planning and investment advice. Serving Central and Northern New Jersey, Yvonne and Bernard (Bernie) Kiely provide over 25 years of experience offering discretionary asset management, retirement planning and income tax preparation. KCM is registered with the State of New Jersey as a Registered Investment Advisor.


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