We live in a country where everything that can be taxed WILL be taxed, and in some states, this can go up as high as 50 percent. This can create not only resentment but also fear for individuals who may have sustained a permanent, disabling injury because they will often wonder if their settlement will be heavily taxed, leaving them with just pennies which won’t be enough to take care of their medical and other needs in the long run. Catastrophic injuries can permanently alter the trajectory of your life, which may then mean a lifetime of medical care, numerous surgeries, ongoing assistive care, home alterations, physical therapy as well as permanent disability which can prevent you from ever going back to work. You may be eligible for a large settlement or court judgment, but you may also be aware of the fact that you live in a state with high taxes on top of not having the prerequisite financial education needed to manage large sums of money for years, or even decades.

Many clients come to us with the question “will my personal injury settlement be taxed?” Others fear that they will receive their settlement as a lump-sum from us and be left to their own devices. This couldn’t be further from the truth, as the goal of our best countywide injury lawyers is to leave you in a better state than the state we found you; read on to find out more about personal injury settlements and the tax implications of the same.

Why Choose McCready Law for Your Injury Case?

Are you looking for the best injury lawyer? Please call us NOW at (314) 481-63338 to learn more about your legal options for justice and compensation. The experienced injury lawyers at McCready Law bring to the table over 90 YEARS of combined legal experience where we’ve helped tens of thousands of injured Americans from all walks of life and across the country get compensated after getting injured due to the negligence of other individuals or large corporations.

Our commitment and excellence to personal injury law has seen us recover over $260 million for our clients and counting, with a lot of these settlements and judgments ranging in the hundreds of thousands of dollars. This excellence can be attributed to a number of factors such as the fact that we personally handle all claims and do not shunt them over to paralegals or legal assistants as is common in most law firms, a practice that often jeopardizes cases.

We also liaise with renowned experts in the forensic, investigative, accounting and medical fields to come up with compelling and objective evidence that demonstrates causation and negligence, as well as medical reports that are objective which can be used to accurately quantify your damages so you can be compensated to the fullest extent of the law. We run a bilingual firm (hablamos Español), and we have nationwide reach thanks to our trusted network of referral attorneys and law firms.

Last but not least is the fact that we take on all cases on contingency fee basis, which simply means that there are ZERO UPFRONT FEES for the duration of the processing of your claim as we only levy our fees at the end of the suit and only if we’ve recovered compensation on your behalf. If you or a loved one got injured due to someone else’s negligence and are worried about the tax implications surrounding your settlement, please reach out to us NOW at (314) 481-63338 to learn more about your legal options for justice and compensation.

What The Law Says About Personal Injury Damages and Taxation

It is first and foremost important to know that personal injury settlements are tax-exempt as indicated in Internal Revenue Code Section 104(a)(2). However, this refers to damages received on account of personal physical injuries or physical sickness. This means that any pain and suffering or linked to the physical harm as well as the medical expenses that result from physical injury or sickness are not taxable, whether they were received as damages through a judgment or lawsuit settlement.

Physical injury or sickness here includes the following

1. Direct bodily harm which includes things like broken bones, burns, internal injuries and lacerations
2. Associated pain and suffering which is compensation for emotional distress, mental anguish, physical pain and loss of enjoyment of life directly linked to the physical injury or sickness directly linked to the physical injury
3. Lost wages or income lost due to not being able to work on account of the physical injury or sickness
4. Any medical expenses that is reimbursement for past and future medical bills, including prescriptions, hospital stays, doctor bills, rehabilitation, physical therapy and so on.

Can Personal Injury Settlements Be Taxable?

That said, the law can be murky and sometime ambiguous when it comes to certain damages and their taxation. For instance, punitive damages which are awarded for the purposes of punishing the at-fault party of egregious conduct and gross negligence is taxable as the purpose is punitive and not compensatory under IRC Section 104(a). Additionally, emotional distress NOT arising from physical injury damages such as defamation, discrimination or wrongful termination is also taxable. Last but not least, if your settlement accrued interest, this interest is taxable, whether it is pre-judgment interest which is calculated from the date of the injury until the date of the judgment or settlement, or post-judgment interest, which is interest that accrues on a judgment from the date of said judgment until the date it is paid.

Best Countrywide Injury Lawyers – Call Us Today!

If you’re worried about filing a personal injury lawsuit due to the tax implications, we’ve got your back: give us a call NOW at (314) 481-63338 so we can look over the particulars of your claim in order to ensure you clear expectations of your tax obligations as well as making sure that you receive maximum compensation due to our legal prowess so you don’t feel Uncle Sam’s pinch. Remember, the call is 100% FREE and there is no legal obligation, thanks for choosing us, and we look forward to helping you.