Usually not, for injury cases like car accidents, motorcycle accidents, tractor-trailer accidents, slip or trip and falls, medical malpractice, or nursing home neglect.

But “usually” is a huge word when we’re talking about the tax man. We know he’ll squeeze you if he can.

Let’s talk about how most settlements escape taxation, and then we’ll address how to deal with the wild card.

Since there’s little reason to fear the IRS getting your settlement, why risk cheating yourself by not knowing how to get the most for your South Carolina accident settlement? We are Spartanburg personal injury attorneys, and we’re here to answer your questions. To get your questions answered, call toll-free at 888-230-1841 or fill out a Get Help Now form.

Why Most South Carolina Accident Injury Settlements Are Not Taxable

Believe it or not, tax law actually helps victims. The United States Tax Code bases taxes on what it defines as gross income. For South Carolina accident injury victims, gross income excludes settlements and verdicts “on account of personal physical injuries.” That’s U.S. Tax Code Section 104(a)(2).

Here’s where it can be critical to have a sharp South Carolina personal injury attorney. Three little words make all the difference in your case: “on account of.”

Those three little words have been interpreted by courts to mean if the origin of the case is an injury, the entire accident settlement can be non-taxable. That’s true even if the settlement pays lost wages, medical bills, pain and suffering (we call it “human loss”), or damage to your marriage (legally called loss of consortium).

But alas, there’s an exception to this.

The Wild Card: Are South Carolina Punitive Damages Settlements Taxable?

The IRS can tax punitive damages. If you’ve got a South Carolina accident case you think involves punitive damages, the first thing to know is that they are extremely hard to get. But don’t walk away from punitive damages for fear of the tax man, for two reasons:

  1. Punitive damages serve a critical purpose.
  2. A sharp South Carolina accident injury attorney can give you a solid chance at reaching a non-taxable settlement, even if the case involves punitive damages.

You’ll need an experienced South Carolina personal injury attorney to help you prove the conduct justifying punitive damages and establish the proper amount of punitive damages you should be awarded.

What Else Don’t You Know About Your South Carolina Accident Injury Case?

This question plagues victims who go it alone. It’s enough to keep you up at night. It also makes the insurance company billions when it gets to keep money from deserving victims who cheat themselves by not knowing how to get the most money from their accident settlement.

Don’t be the insurance company’s dream. You’re smarter than that, or you wouldn’t be here. Get informed in your South Carolina accident injury case. We’re here to answer your questions in Spartanburg, and we’ll tell you if you honestly don’t need a lawyer.

You can contact us with a live chat, fill out a Get Help Now form, or call toll-free at 888-230-1841. See what it’s like to meet with our Spartanburg personal injury lawyer in a FREE, EASY strategy session. And be sure to check out the reviews we don’t script, edit, or pay for on an attorney review website we don’t own, plus Google.  


Rob Usry
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Rob is a Spartanburg personal injury lawyer. Rob also practices as a workers' compensation attorney.