Awards & Taxes
Tax Implications to Personal Injury Awards
What are the tax implications on money paid to compensate me for my injuries resulting from a car accident?
The general rule of thumb is that monetary damages that are awarded either through a verdict or settlement negotiations that compensate an injured person for personal physical injuries or physical sickness are excludable from gross income.
Monetary damages that are awarded either through a verdict or settlement for nonphysical injuries, such as employment discrimination or injury to ones reputation are taxable. Additionally, awards for lost wages are taxable since had those wages been paid, the government would have received their cut at an earlier time.
Punitive damages which are not designed to compensate the individual for their injury but rather punish the defendant for reprehensible conduct do constitute taxable income.
Tax & Legal Advice
This is merely the general rule of thumb regarding tax implications of a personal injury award. As always, consult with a competent and qualified attorney or an accountant for advice regarding your specific situation and award.
The Spokane, Washington Law Firm of Robert Hahn is one of the leading firms in the area of Personal Injury Law. Our personal Injury clients have the peace of mind in knowing that their case is being handled by an experienced Plaintiffs injury attorney. Our aggressive representation and extensive experience has earned the firm of Robert C. Hahn, III, a stellar reputation for excellence in the representation of injured people. Robert Hahn’s goal is to provide excellent service by a highly experienced lawyer and legal professionals at an affordable fee.
After helping hundreds of injured people ranging from complex litigation to simple settlement of claims in Spokane and surrounding areas, Spokane Attorney Robert Hahn has the background to explain your alternatives and suggest a solution to your injury difficulties.If you are considering hiring a personal injury attorney, make sure that the attorneys you are considering practice in personal injury law because you need a law firm that deals with these issues on a daily basis.