Will I Need to Pay Taxes on My Personal Injury Settlement?

Where money is concerned, taxation can be a big problem. The government takes a huge part of your settlement when you think that it was a good one. You will stop thinking about how the government is going to tax your money when making a claim for your personal case. If you plan, you relieve yourself of much frustration.

Tenina Law Injury Attorneys will work to maximize your claim. Our team of injury lawyers will examine the tax law in relation to your claim from day one. You can have absolute confidence in your settlement and that you are abiding by the law.

Taxes on Economic Damages Awards

Most personal injury settlements have a good chunk directed toward the awarding of economic damages. The government will not tax your award if you have claimed medical expenses as deductions from previous tax years. You will be required to pay back taxes in case you had received a tax deduction.

You will have the award for lost wages taxed because, had you been working, you would have been having taxes deducted. The amount by which you will be taxed will depend on the job you were doing prior to your accident.

If your monetary award is for damage to your personal property, you won’t have to pay tax if the amount is not more than your property’s worth. You will also be charged taxes on the money that you get as an outcome or award due to a personal injury.

Other Taxes You Need to Pay on Your Settlement

If you must confidentiality agree with a grossly negligent defendant, you receive punitive damage for your claim to which you must pay tax. You might also be in a position to win interest on your claim depending on how long your court case has been going on. Any interest you receive on your settlement is taxed.

This article was written by Alla Tenina. Alla is a top Orange County personal injury lawyer, and the founder of Tenina Law. She has experience in bankruptcies, real estate planning, and complex tax matters. The information provided on this website does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only. Information on this website may not constitute the most up-to-date legal or other information. This website contains links to other third-party websites. Such links are only for the convenience of the reader, user or browser; the ABA and its members do not recommend or endorse the contents of the third-party sites.