The Tax Implications of Selling Your Structured Settlement Payments

When you decide to sell your structured settlement payments, you may wonder if you need to pay taxes on the proceeds of your sale. 

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Can My Settlement Payment Sale Be Taxed?

In most cases, qualified structured settlement payments and the lump sum that you receive from selling them are tax exempt, meaning that you should have no tax implications to worry about when considering selling your settlement payments to J.G. Wentworth. There are, however, instances where taxes may be incurred. No matter what type of settlement you are trying to sell, it is advisable to seek out a tax professional to discuss your specific situation and help you determine what, if any, tax implications may result from selling your structured settlement.

 


 

Non-Taxed Structured Settlements

If you have settled a wrongful death, personal injury, or medical malpractice claim, your payments for those causes of action are generally tax exempt. The Structured Settlement Protection Act of 2002 provides that taxes do not have to be paid on the lump sum you receive for the sale of your structured settlement payments, provided that all of the proper steps have been taken in the payment sale process. This includes approving the transaction in a qualified order. When your payment sale is approved through a qualified order, it guarantees that:

  • The transfer does not contravene any Federal or State statute
  • The transfer is in your best interest, taking into account the welfare and support of any dependents you may claim
  • The transfer is issued under the authority of an applicable State statute

With more than two decades of experience purchasing structured settlement payments, J.G. Wentworth has been through this process countless times, and will always make sure your transaction goes through the necessary steps to avoid tax implications for your sale. 

Contact Us

For any other questions about structured settlements, tax implications of selling, or general questions about life after selling, feel free to call J.G. Wentworth today!

Sources
https://www.gpo.gov/fdsys/pkg/USCODE-2008-title26/pdf/USCODE-2008-title26-subtitleE-chap55-sec5891.pdf
https://www.webharvest.gov/congress109th/20061120085725/http://www.house.gov/jct/x-15-99.htm
Citation: Joint Committee on Taxation,Tax Treatment of Structured Settlement Arrangements, (JCX-15-99), March 16, 1999.