With tax season upon us, we’d like to take this opportunity to share with you just how a jury award or settlement from a personal injury suit will be looked at by the taxman.
Before legislation was changed in 1996, practically all personal injury settlements and jury awards were ruled to be non-taxable – meaning you didn’t have to pay taxes on what you were given or awarded.
Changes were made in 1996 to Section 104 of the U.S. tax code that placed limits on which types of injuries would receive the tax-free status: actual physical injuries or physical sickness.
In short, this means that as long as a physical injury resulted in you being compensated for lost wages, medical bills, pain & suffering, loss of consortium, emotional distress, lawyer fees, etc., your award or settlement will not be taxable.
As for the physical sickness qualifier, if, for example, you had been exposed to a virus by someone’s negligence and you became sick, the damages you’re awarded are tax-free.
The IRS has included a couple of exceptions that will make settlements and jury awards for personal injury suits. They are:
If you’ve suffered injuries because of someone else’s negligence, it’s very important that you speak with an attorney skilled in personal injury law so that you’re properly compensated for lost wages, medical bills, etc.
Get in touch with us here at Barber & Associates. The first consultation is always free.
Our number is 907-276-5858 or you can reach us via email.
Barber & Associates, LLC has recovered more than 45 Million Dollars in verdicts and settlements for Injured Alaskans.
Auto accidents can happen to anyone at any time, regardless of how defensive someone may be behind the wheel. If you or someone you love has been harmed in such an incident, you have legal rights and options that need to be explored.