workers's comp settlement - will it be taxed?

[KellyJef]

DH has been on worker's comp for several years.

After a very serious heart attack, our lawyer suggested that DH might be better off taking a settlement because if he had died, the wc payments would have stopped and I would have been left with nothing, whereas if he took a settlement, I would have had some money in the bank.

We took the lump sum settlement in 2009. Will we have to pay taxes on that money when we go to do our taxes next week?

[wincrasher]

Have you been paying taxes on the monthly payments these "several" years? I don't think you should have been.

You shouldn't on the lump sum either. You should check with a tax adviser. But I believe it's in the same category as an insurance payout.

Generally you don't pay taxes on insurance payouts or payments resulting from lawsuits.