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The tax treatment of your settlement money depends on the nature of the settlement. Generally, if the settlement is for physical injuries or sickness, it's not taxable under IRS rules. However, if the settlement is for something else, like damage to credit, it's typically considered taxable income.

The reason the insurance company is asking for a W-9 is because they're required to report certain payments to the IRS, and they need your information to do that. If they're treating the settlement as taxable, they'll likely issue you a 1099 form at the end of the year, which you'll need to include when you file your taxes.

Remember, this is a general explanation. Your specific situation might be different, so it's always a good idea to keep track of any documents and consult with a tax professional if you're unsure.