Are compensation payments for motorcycle accident injuries tax-free?

In New York, any compensation payments received following a motorcycle accident which covers medical expenses or lost wages are generally considered to be tax-free. In other words, the funds you receive from the responsible party or your insurance company in this situation will not be included in your taxable income. However, it is important to note that some compensation payments may be subject to taxation. Generally, these payments cover what are known as “pain and suffering” damages or punitive damages. These types of payments are usually awarded as a result of a court decision. These types of payments may be considered taxable income and should be included in your tax filing when applicable. Additionally, any interest earned on any compensation payments may be subject to taxation. It is important to speak with a qualified tax professional or lawyer to determine what types of payments may be taxable. Finally, riders should be aware that insurance companies may issue a Form 1099 stating the amount of any compensation payments that were issued. The form will show how much of the payment is taxable. Be sure to include this form with your annual filing.

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Are compensation payments for motorcycle accident injuries tax-free?

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