Taxable Income?

When receiving a settlement for injuries sustained in an automobile accident I am aware that initially it is not taxed.Does that sum at a later time ever become income and taxed.

Public Comments

1. Nope, its allllllll yours.
2. If any of the settlement was for lost wages, then that portion is taxable in the year received. The settlement otherwise is not taxable, but if you put the funds into an interest bearing account, any interest earned on the settlement would then be taxable. Publication 525 http://www.irs.gov/publications/p525/index.html
3. Nope.
4. Compensatory damages - NO (they are to compensate you for lost $$$) Punitive damages - YES (to punish the offending party) The type should be laid out in the settlement.