Will I Have to Pay Taxes on My Personal Injury Settlement?June 12, 2020
Personal injury accidents are devastating for the victims in more than one way. The accident was probably scary, but you’re also dealing with a difficult aftermath. Maybe you are suffering from physical pain. Perhaps you are experiencing mental trauma, such as post-traumatic stress disorder (PTSD). PTSD is a common issue following a traumatic event.
In addition to the physical and mental effects, you could be dealing with financial losses. You could be faced with medical bills you can’t afford, lost income, and costs of physical therapy or mental health treatment. These problems are stressful, sometimes causing more issues than the accident itself.
You need to receive a full and fair settlement to pay for all of your losses. You don’t need the IRS coming in to scoop up large pieces of your settlement.
Some Good News
Good news: The IRS does not usually take personal injury settlement money away from victims. They don’t usually consider personal injury settlements as taxable income. Phew. This means that the money you receive from your injury claim is yours to keep and do with as you see fit.
There are only a few exceptions to this. The first exception is if you claimed your medical bills on your taxes. This could have reduced your tax liability. You may owe some money to the IRS for any settlement money you receive compensating you for medical costs. Since the IRS already gave you a discount on your taxes because you paid medical bills, they may ask you to pay up.
You should talk to your lawyer about whether you will need to pay taxes in your specific case.
Another rare exception is if your case is unique in that one of your losses was related to a loss in property value. The money you win in a settlement intended to compensate you for that loss could be considered taxable income.
What Your Settlement Could Pay For
Your personal injury settlement is intended to compensate you for the wrong done against you. You may need that money to live on if your injuries prevent you from working. You may need that money to pay for medical bills and other financial losses. Here is a list of some damages commonly paid out in personal injury claims:
- Medical costs
- Lost life enjoyment
- Pain and suffering
- Property damage
- Mental distress
- Lost income
- Lost ability to earn an income
- Permanent injury
Call a Personal Injury Lawyer in Pensacola, FL
Filing a personal injury claim can be a challenge, particularly when you’ve just been through a traumatic incident. Your claim could bring you justice and money for your accident. You could use that money to provide for your future, pay for your losses, and feel whole again.
Get in touch with a personal injury lawyer in Pensacola. They are ready to assist you with your case and support you during this difficult time. Call Gross & Schuster, P.A. at 850-434-3333 or complete the internet form below to reach our firm.