Accidents are not always avoidable, and dealing with the personal injuries afterwards can often be a nightmare. However, the ordeal does not have to be intolerable. By working with a personal injury lawyer, you can recoup all of your losses as well as set yourself up moving forward, and attorney Robert White would like to do exactly that for you.
One of the more common questions that personal injury lawyers face regards the settlement. Specifically, do you have to pay federal and state taxes on any settlement that you receive? This is a very important question for obvious reasons, and we would like to dive more into the answer down below.
Most settlements that you receive through a personal injury case are not subject to federal or state taxes, regardless of whether the case was settled before or after submitting a lawsuit. Moreover, taxes still do not apply even if the case went to a jury trial.
The only caveat is that these tax exemptions are meant to cover cases involving physical injury. This is fair considering that physical injuries often result in increased medical expenses along with additional financial burdens, which the settlement should alleviate. It should also be noted that illness, if related to the personal injury claim, also falls under physical injury, meaning that claims based on such sickness cannot be taxed either.
There are a handful of exceptions to these general rules, which are outlined below.
Breach of Contract
If personal injury resulted from a breach of contract, the settlement can still be taxed despite physical injury.
Interest on the Judgment
Some states will add interest to the final settlement based on how long the case itself was pending. This interest will grow higher the longer the case is unresolved, and it is subject to taxation.
If emotional and not physical injury is what you are claiming in your personal injury case, the settlement amount will probably be taxed.
Any awarded punitive damages are subject to taxation. Many lawyers will therefore ask the judge to divide the final amount into punitive damages and compensatory damages, the latter of which is not taxable.
Contact a Personal Injury Lawyer for More Information
Personal injury claims can have wide ranging consequences, and it is critically important that you have a professional personal injury lawyer on your side to knock aside the legal obstacles standing between you a fair settlement. Only by entrusting your case to a reliable attorney can you turn your attention back where it needs to be: your own well being and improvement.
Attorney Robert White knows all too well how important the right compensation can be to overcoming the effects of a disastrous personal injury, and he would like to share his years of professional experience with you. For additional information on settlement taxes or if you would like to learn more about submitting a personal injury claim, contact a representative of attorney Robert White today.