DO I HAVE TO PAY TAXES ON MY CAR WRECK SETTLEMENT?
So you were able to settle your case. Congratulations!
You are feeling a sense of relief and satisfaction, and you are planning your next steps. This informational blog provides valuable information that may be useful if you are considering a personal injury settlement.
Q: Do I have to pay taxes on your settlement proceeds?
A: Luckily, the general answer is no! The federal government does not tax settlement proceeds from a personal injury.
Q: I was awarded proceeds for lost wages as a part of my personal injury settlement. Is this taxed?
A: So there are always exceptions to the general rule, and this is one of them. Any portion of the settlement that is received as reimbursement for lost wages, would be taxed.
Q: What other exceptions should I know of when considering my personal injury settlement?
A: If you are awarded punitive damages, those would also be taxed. Any interest you earn on your judgment from a Court before you take possession of the funds would also be taxable.
If you or a loved one is considering a personal injury settlement, it is important to understand tax implications. Remember, every situation is different, so make sure to consult with a tax professional. The Internal Revenue Service (IRS), also provides a handy online brochure that explains tax implications after a personal injury settlement from a car accident, 18-wheeler accident, or other injury claim.
If you or a loved one is involved in a car crash, 18-wheeler wreck, company vehicle accident, or you have suffered any other injury, call The Patel Firm PLLC today. From Corpus Christi to San Antonio, Dallas, Waco, Houston, The Rio Grande Valley and beyond, The Patel Firm PLLC is a phone call away. Contact us today.
*This blog is for informational purposes only and is not intended to, and should not be construed as legal advice.