Injury Awards and Taxation
After a collision in which someone else was to blame, a person may decide to pursue compensation in court. If the case is successful or the person accepts a settlement, he or she may be granted a sum of money to cover the expenses related to the accident. This money often helps to restore that individual’s financial security. However, some claimants may question whether the government can tax this money or not. Generally speaking, taxes are not taken from personal injury awards.
To discuss the details of your claim with an experienced legal advocate, contact the Iowa car accident lawyers of LaMarca Law Group, P.C., at 877-327-2600 today.
Non-Taxable Settlements and Awards
According to the federal tax code, the IRS will not usually collect taxes on a person injury sum. These funds serve to compensate the injured for their loss, which would mean that taxes could cut out a significant portion of that compensation. The following types of claim awards or settlements fall under this non-taxable status for the recipient:
- Injury compensation
- Money received for medical bills
- Repaid lost wages
- Emotional distress compensation
- Loss of personal relationships
While the sum itself is considered non-taxable by the government, any interest related to the sum is taxed. Additionally, punitive fines, often awarded only in cases of reckless or purposeful negligence, can be taxed.
If you or someone you love has been injured in a car collision caused by another party, contact the Iowa car accident attorneys of LaMarca Law Group, P.C., by calling 877-327-2600. Let us help you with a free consultation regarding your rights and options today.