Auto Insurance Claims: Taxation on Insurance Settlement, short term disability, personal injury protection

Question
Hello,
I was in a motorcycle accident recently, it was a hit and run with a car.  I suffered many injuries and was hospitalized, I live in Massachusetts.  My lawyer tells me that I am entitled to money (between 20-40k) from my motorcycle insurance policy under the Uninsured Motorist and Personal Injury Protection clauses.  I am collecting pay from my short term disability coverage through my employer.

Is the money from my insurance company going to be taxable or not?
Thanks,
Kevin

Answer
Hi Kevin,

No. The proceeds from an insurance settlement are not taxable. However it is possible that a portion of the settlement that is meant to pay for lost wages may be subject to regular income tax. I'm not sure. You should ask a local CPA or Enrolled Agent (Accountant) just to be sure.

I hope this helps
Richard Hixenbaugh