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IRS.gov Website
Publication 502
taxmap/pubs/p502-009.htm#en_us_publink1000179140

Damages for Personal Injuries(p20)

rule
If you receive an amount in settlement of a personal injury suit, part of that award may be for medical expenses that you deducted in an earlier year. If it is, you must include that part in your income in the year you receive it to the extent it reduced your taxable income in the earlier year. See What If You Receive Insurance Reimbursement in a Later Year, discussed earlier under How Do You Treat Reimbursements.
taxmap/pubs/p502-009.htm#en_us_publink1000179142

Example.(p21)

You sued this year for injuries you suffered in an accident last year. You sought $10,000 for your injuries and did not itemize your damages. Last year, you paid $500 for medical expenses for your injuries. You deducted those expenses on last year's tax return. This year you settled your lawsuit for $2,000. Your settlement did not itemize or allocate the damages. The $2,000 is first presumed to be for the medical expenses that you deducted. The $500 is includible in your income this year because you deducted the entire $500 as a medical expense deduction last year.
taxmap/pubs/p502-009.htm#en_us_publink1000179143

Future medical expenses.(p21)

rule
If you receive an amount in settlement of a damage suit for personal injuries, part of that award may be for future medical expenses. If it is, you must reduce any future medical expenses for these injuries until the amount you received has been completely used.
taxmap/pubs/p502-009.htm#en_us_publink1000179144

Example.(p21)

You were injured in an accident. You sued and sought a judgment of $50,000 for your injuries. You settled the suit for $45,000. The settlement provided that $10,000 of the $45,000 was for future medical expenses for your injuries. You cannot include the first $10,000 that you pay for medical expenses for those injuries.
taxmap/pubs/p502-009.htm#en_us_publink1000179145

Workers' compensation.(p21)

rule
If you received workers' compensation and you deducted medical expenses related to that injury, you must include the workers' compensation in income up to the amount you deducted. If you received workers' compensation, but did not deduct medical expenses related to that injury, do not include the workers' compensation in your income.