When you’re harmed by an intentional wrongful act or someone’s negligence, you can file a civil lawsuit against them. Here you may be awarded compensation for losses, including your medical expenses, lost wages, pain and suffering, and property damage. It is important to consult with a qualified personal injury attorney to determine the best course of action for your specific case.
You may find yourself wondering whether this compensation is taxable. The good news is that, in most cases, personal injury settlements are not taxable. However, there are some exceptions to this rule, so it’s important to consult with a tax professional to ensure you understand your specific situation. Here are some simple explanations of what you should expect.
Are personal injury settlements taxable on the federal level?
The IRS isn’t permitted to take any portion of your funds because our settlement isn’t taxable on the federal level as long as you’re being compensated for a physical injury. (You should note that any money received for emotional distress or pain and suffering is taxable.) This is because these funds are meant to compensate you for the losses you’ve endured. It’s important to note that the tax treatment of settlement money may vary depending on the specific circumstances of your case and the type of damages awarded. For instance, if you invest your settlement money and earn interest, the interest income may be subject to taxes. This is why you should always consult with a tax professional for personalized advice.
Tax laws are complex and subject to change, so seeking guidance from a tax professional can ensure that you are in compliance with current regulations and maximizing your deductions. Additionally, a tax professional can provide personalized advice based on your specific situation and help you navigate any potential issues that may arise. Usually, you don’t have to go through this alone because your personal injury attorney may know someone they can refer you to after your case is settled.
Are personal injury settlements taxable on the state level?
It is important to consult with a tax professional or a personal injury attorney to determine if your state imposes taxes on personal injury settlements. Additionally, the taxability of a settlement may depend on the specific circumstances of your case and the type of damages awarded.
Since each state handles taxes differently, it’s important to carefully document and provide evidence of the losses you suffered in order to receive fair compensation. Additionally, seeking legal assistance may be helpful in navigating the process of obtaining compensation. Once you’ve done so, most states will not tax this money. Instead, they’ll handle it as the IRS does.
Where can you get a personal injury attorney?
Blenner Legal Group in Palm Harbor, FL, is a reputable law firm that specializes in personal injury cases. Their experienced personal injury attorneys provide clients with personalized and compassionate legal representation. Contact them today for any information you may need regarding your case. Their lawyers are standing by, waiting to help you.