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Do you know the tax implications of an accident settlement?

As the sun sets on 2014, our minds may well be focused on the holidays and the joys they bring; not on the more mundane realities of life. But the fact is the mundane matters are never very far out of sight. Just over the hill is April 15. Tax time.

While just as assured as the holidays come and go, we're certain tax time is not nearly as welcomed by a lot of folks in the Galveston area. And it is something that deserves to be taken into consideration by anyone in the proper course of assessing the tax implications of pursuing a personal injury claim.

On the one hand, if you have suffered injury in a crash with a commercial vehicle, you deserve to be made whole and the driver, and perhaps the company who employed that driver, should expect to be held accountable for that financial recovery.

On the other hand, a question that is fair to ask is whether any proceeds you might receive are considered taxable? As is often the case with legal questions, it depends on your specific circumstances. And that's why it's always important to consult with an experienced attorney.

If you pose this question to the IRS, you may get different answers depending on whom you talk to. And, of course, chances are good that whatever answers you get will be prefaced with a disclaimer of guarantee. But here's what one IRS document offers.

If you have to include proceeds from a personal injury award, whether obtained through settlement or litigation, depends on all the facts of your case. If funds can be directly attributable to medical expenses for the given tax year, it shouldn't be considered taxable as income. But if the money covers costs for previous years that have already been deducted on taxes, that amount may be taxable.

Perhaps the easiest gauge of what may be taxable or not comes down to this: If you realized income from an injury settlement, directly or through earned interest, the IRS will want it reported on your taxes. Where questions exist, consult with a professional.

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