Legal Question in Medical Malpractice in Texas

Re: Tax on settlement

You do not have to pay (or report) taxes on that portion of the settlement that is for a "casualty-loss reimbursement" (pain and suffering damages), but you do have to report and pay taxes on any portion attributed to wages (lost wages or loss of wage-earning capacity) and, if you are reimbursed for medical bills AND you deducted those medical bills from your income tax return. (If you did not deduct the medical bills from your taxes, you do not have to pay taxes when you are reimbursed for them in your settlement.) Consult your tax advisor for more details.