Do I have to report my personal injury settlement to the IRS?

Do I have to report my personal injury settlement to the IRS?

The compensatory portion of a personal injury settlement does not need to be reported as income on your federal return. However, if you received punitive damages, pre-judgment interest, or compensation for lost wages that was separately itemized (without a physical injury nexus), those components must be reported. You should also receive a 1099-MISC if any taxable component exceeds $600. We strongly recommend consulting a CPA or tax attorney following any significant recovery.