Taxes and Personal Injury Awards
Generally speaking, large sums of money received as income tend to be taxable under the federal tax code. In certain circumstances, these funds may receive an exemption. Specifically, the awards and settlements granted from a personal injury claim are not always taxable. Depending on the type of claim, a person may not need to pay taxes for that settlement amount.
For additional information regarding your rights as a victim of an automobile accident in which someone else was to blame, contact the Waukesha car accident attorneys of Habush Habush & Rottier S.C. ®, at 800-242-2874 today.
Taxable and Non-Taxable Amounts
According to the tax code, awards related to employee disputes and libel or reputation issues are considered taxable. Additionally, claims involving payment in the form of punitive damages can be taxed by the government. However, most other kinds of civil litigation awards and settlements are not taxable. These include the following:
- Compensation for injuries
- Medical bills
- Lost wage compensation
- Funds for emotional damages
While these settlements will not be taxed, any interest resulting from these injury claim awards may be taxed. This means that the actual amount awarded for compensation will not be under the purview of the IRS, but any additional money factored in due to the time of the claim may fall under the scrutiny of the tax code.
If you have been in an accident caused by a reckless driver and have sustained an injury, there may be legal action available for you. To discuss your rights and options with an experienced legal advisor, contact the Waukesha car accident lawyers of Habush Habush & Rottier S.C. ®, today by calling 800-242-2874.