In the midst of tax season we are all thinking about income and tax payments or refunds. If you have proceeds from a personal injury suit, or are contemplating a personal injury suit, you might have questions about the tax implications those proceeds might have. Generally, the proceeds of a personal injury suit are non-taxable. This is not a hard and fast rule, however, and each case needs to be examined independently. There is also the possibility that a portion of the proceeds are taxed. It is important to bring these questions up during settlement negotiations so that you know the implications of this new “income” you are receiving. You do not want your settlement amount to go straight to the IRS.
There is the possibility that some damages from a personal injury suit can be taxable. The way that damage amounts are classified in a settlement agreement can make the difference between tax liability or no liability at all. These damages include:
Reducing Tax Liability
When you hear that there is the possibility that taxes will be paid on a damage amount, you might be nervous to file a personal injury suit. This should not be a deterrent. There are ways and strategies to reduce the tax liability you might owe on the proceeds of a personal injury settlement.
The personal injury attorneys at Jonathan R. Brockman, P.C. are here to help you with all of your personal injury suit needs. Do not let the fear of tax payments deter you from receiving the compensation you might be entitled to after an injury. Our attorneys work tirelessly to get you the maximum amount of compensation and on the road to recovery. Contact us today for a consultation.