Do Personal Injury Settlements Get Taxed?
After a serious injury, you need compensation that covers all your losses, expenses, and suffering. But one of your earliest concerns may be about taxes. You may be worried about losing part of your funds, leaving you without the full compensation you need to cover your suffering.
Working with a personal injury lawyer at Greenstein & Milbauer, LLP can help. Your lawyer can review your personal injury settlement and discuss what parts of your claim may be taxed. They can give you an overview of your funds, their fees, and other expenses so that you have a stronger understanding of your compensation.
Parts of Your Settlement May Be Taxable
When someone injures you and you sue, the compensation you receive is there to compensate you for lost finances and mental and emotional trauma, and sometimes to punish the wrongdoer for their actions. Because much of your compensation is repayment for things you lost or suffered, generally, these portions of your personal injury settlement won’t be taxed.
But you may find yourself dealing with some exceptions. For example, punitive damages may be taxed because these damages aren’t intended to compensate you. They’re meant to deter negligent actions and punish the at-fault party.
If you receive compensation for lost wages, this can also be taxed in some cases. For example, if you’re dealing with an employment-related claim, like discrimination, your settlement may be taxable.
Maximizing Your Compensation
Maximizing your claim’s value is key to your recovery. You have bills to pay, debts to cover, and injuries to heal from. That can add up fast, which is why you may need help ensuring you get the maximum compensation you’re due.
Let’s say you ask for a smaller settlement than you need for your claim. When your taxes are paid and other fees are settled, you may have little left for your recovery and more out-of-pocket costs.
But you don’t have to guess or hope for the best when seeking a settlement. Your lawyer can calculate the full value of your claim, maximizing your potential compensation so you don’t have to worry about how you’ll afford your recovery after taxes.
Review Your Settlement with a Lawyer
When you’re seriously injured, you need to know what compensation to expect for the damages you suffered. But that can be tough when you’re unsure about taxes, fees, and fines. So how do you avoid paying out of pocket because you lost part of your personal injury settlement to the government?
At Greenstein & Milbauer, LLP, we understand that getting your maximum compensation can be tough. Luckily, that’s where a lawyer from our firm can help. Take advantage of a free consultation and learn more about your claim when you call 1-800-VICTIM2 (842-8462) or complete the online contact form below.