Taxes and Personal Injury Claims
Financial compensation awarded in a successful personal injury claim can be vital to helping an accident victim to cope with medical bills, lost wages, and other burdens arising due to another party’s negligence. However, these settlements are often regarded as income and it is important to consider the associated tax implications. With often substantial amounts being received by the claimant, a tax levied on those funds could severely limit their value to the plaintiff.
To learn more about how a personal injury lawsuit might impact your finances, contact the Houston personal injury attorneys of Williams Kherkher at 832-369-8296 today.
Taxable and Non-Taxable Funds
There are many forms of personal injury compensation that do not require a plaintiff to pay taxes. These funds are considered non-taxable, even though they technically count as a form of income. This compensation includes the following:
- Injury compensation
- Medical bills
- Lost wages
- Emotional damages
There are some types of compensation that the government will tax. These include the following cases:
- Punitive fees
- Libel
- Employment claims
- Interest on compensation amounts
In determining taxability, the government does not differentiate between settlements and court awards. Additionally, there is no difference, for tax purposes, between lump sums and structured pay-outs.
Contact Us
If you have been injured in an accident that was caused by another individual’s negligent behavior, a civil lawsuit may be appropriate. To discuss the details of your claim with an experienced and determined legal advocate, contact the Houston personal injury lawyers of Williams Kherkher today by calling 832-369-8296.