I received a large settlement this year from a car accident. Out of that settlement, I paid over $100k in medical bills. Can I claim the medical expenses I paid because it was my money for pain and suffering? My lawyer says he believes so, because of the way the payout was structured, but is not an expert in that area. Any advice? Should I consult with a tax attorney.
1 Answer from Attorneys
Your lawyer is correct, it all depends on how the settlement was structured. You probably received money for pain and suffering, medical expenses, and perhaps lost wages. If the funds were designated for reimbursement of medical expenses, they would likely not be deductible. However, if they were designated for something else, they could be.
You should definitely sit down with a reputable accountant or tax attorney who can advise how to report the settlement and any deductions on your 1040 return.
Good luck to you. Let me know if I can be of assistance to you.
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