Personal Injury Settlements And Taxes
The process of settling a lawsuit can be emotional and time consuming. It is common for victims to be so focused on receiving their settlement that they do not consider what happens next. While being whole after an accident injury is important, keeping in mind any tax responsibilities you may have once you receive the money is a way to properly prepare for your financial future.
Each situation is unique so talking with a tax professional could shine light on your personal situation. Once you work with a Bucks County personal injury attorney to secure the maximum compensation package, you may have to pay taxes on some or all of the funds received.
Taxable Forms of Settlement Compensation
It is important to note that if your personal injury dispute is settled outside of court, the compensation is referred to as a settlement. When the dispute goes to formal court, the court will order damage payment. These forms of compensation, a settlement and an order, differ, but both are taxable.
Forms of compensation that may be taxable:
- Payments for lost wages or income
- Financial settlements for interest payments
- Breach of contract and infringement damage recovery
Personal injury settlements depend on the situation. If it can be proven that there was bodily harm, the funds may be free from taxation. But if lost wages and other forms of loss reimbursement is part of the case, those gains could be subject to taxation.
Pain and Suffering in Connection with Physical Harm
The area of taxation for funds connected to emotional distress can be complex. It will depend, in many situations, if the pain and suffering was caused by bodily damage or if the emotional turmoil resulted in physical injury. Basically, compensation for pain and suffering issues are not taxed if it can be proven they are directly related to the physical injury.
Talking through the intricacies of your claim or case with a Bucks County personal injury attorney is a path to fully understanding your recovery options. Understanding possible fees and taxation is needed, because then you will know what level of compensation makes sense for you to move past an event.
For example, if a person is offered a settlement amount and believes every penny will go toward their expenses, they may be unsettled when there are fees and taxation later. Expenses that can significantly change the amount a victim will have deposited into their personal financial accounts. After a long fight involving personal pain and monetary loss, fortify your future and retain as much of your settlement award as possible.
Are you unsure of what final settlement amount could be fair given your accident injuries? You may have a right to financial compensation if the accident was caused by another’s negligence. Contact a member of the legal team at Kardos, Rickles & Hand. Our attorneys know how to secure the maximum settlement amount possible. Accidents happen every day. When they happen to you, it is essential you have a lawyer fighting for your rights. Reach out today, call 215-968-6602.