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Will I Have to Pay Taxes on My Personal Injury Settlement?
When you’re hurt and seeking a personal injury settlement, you may be happy with the amount you received. You’re relieved that you’re not paying out of pocket because someone else made a mistake. But could you be paying for it later?
At the Law Offices of Gary S. Greenberg, we hear many clients asking, “Will I have to pay taxes on my personal injury settlement?” The answer depends on your settlement and the losses you’ve suffered, so reach out to an injury lawyer before you file a claim.
You Don’t Have to Pay Taxes for Your Physical Injury Compensation
Certain losses caused by your accident, also called damages, can’t be taxed by federal law. For example, if you received compensation for a physical injury, that compensation can’t be taxed. The details can be more complex, but generally, you don’t have to pay for those losses.
Certain losses of property value are also non-taxable. Many of your financial losses, also called economic damages, can’t be taxed.
Certain Types of Damages May Be Taxable
That doesn’t mean all your compensation won’t be taxed. For example, your personal injury settlement may also focus on the emotional damages, or pain and suffering, you experienced. These non-economic damages may be taxed.
Your punitive damages can also be taxed. Because these damages aren’t meant to make up for the losses you’ve suffered, they may not be considered by the IRS in the same way your compensatory damages are. That means when tax season comes around in Milwaukee, you may see some effects on your taxes because of your lawsuit.
Talk to Your Lawyer about Your Personal Injury Settlement and Your Taxes
Minimizing the taxes you’ll pay on a personal injury settlement can be tough. You may not have had the tools to find your claim’s value, and now, you may be struggling to determine whether your taxes will be affected.
At the Law Offices of Gary S. Greenberg, we know that dealing with the IRS is rarely easy, but we’re here to help you deal with them and your personal injury settlement. Connect with your injury lawyer for a free consultation by calling 414-271-7007 or by filling out the online contact form below.