Are settlements taxed and if so when?

Question

My friend wanted to know if her settlement would be taxed and when it would happen, when she gets the money or when she does her taxes?

The lawsuit is based on a car accident and inurys acquired that were not her fault.

Any info would be appreciated.

Answer 1

No,  it's tax free.

Answer 2

no, settlements are not considered income. They can only tax earned income, settlements are not earned income.Don't worry about it.

Answer 3

It depends on specifically what the settlement was for.  Amounts for injuries aren't taxes, but if any of it was for lost wages, that part is taxed.