L&i Settlement, Washington State. Irs Saying I Owe $

A couple years ago I got injured on the job. After about 2 years of fighting over 6 months of rehab, in person because it was a TBI, I reached maximum recovery which is still not good I'm still suffering from this injury and struggling to find work. I haven't been employed for a year, and my settlement was small. I got awarded $30,000, my l&I lawyer took a third, another third went to paying off things that went to the wayside while I was going through treatment. The rest is gone. I have a young son and I'm struggling to support him. I recently got a letter from the IRS saying that I owe them close to $10,000 on the settlement. I was told since it was through l&I and a closing settlement that I wouldn't owe any taxes on it and didn't have to claim it even. I'm not sure what to do. Am I going to end up having to owe money I don't have?