Will I Have to Pay Taxes on My Personal Injury Settlement?
Being injured in an accident in Florida can be life changing. You could be stuck suffering from physical pain caused by your injuries. You could be struggling to overcome mental anguish caused by a traumatic event. Maybe you are dealing with a permanent injury and are trying to figure out how to put your life back together.
You need to obtain financial compensation for your accident through a personal injury claim. You need the money from a settlement to pay for your losses and prepare for the future. But what will you do if the IRS takes a large portion of the money you get paid in a settlement? How will you survive if your settlement is diminished?
Can the IRS Take a Portion of Your Personal Injury Settlement Money?
Luckily, personal injury settlements are usually exempt from tax garnishment. This compensation is not usually counted as income.
For instance, if you were in a vehicle accident that caused you to suffer physical pain, mental distress, permanent injuries, damage to your vehicle, and lost income, you could receive a full settlement from an insurance company for what you went through. This money may not be taxable. You could get to keep all of the settlement money you receive.
There are always exceptions, though. Here are a few exceptions you should be aware of.
Let’s say your accident caused you a great deal of medical expenses. If you deducted those medical costs in your tax return, you would have to pay taxes on any settlement amount that went to your medical costs. You would pay taxes only on the medical portion of your settlement money because the IRS already accounted for those costs when you deducted them in your taxes.
Another exception is if you suffer lost value in property. If you receive money over the adjusted basis in the property, the additional amount would be considered taxable income.
If you suffer a loss of profits, you might need to include money won in a settlement as income.
Should You Get Help from a Personal Injury Lawyer?
Personal injury claims can get complicated, and it’s usually a good idea to have a lawyer’s help when dealing with anything of a legal nature. You don’t want to run into issues down the line.
A lawyer can help you understand what you’re owed in a settlement. They can make sure you know whether you owe any money in taxes.
Connect with a Florida Personal Injury Lawyer
If you’ve been injured in an accident, you might be looking at filing a personal injury claim. Filing a claim can be overwhelming to handle without legal help. There’s no real reason not to get help from a lawyer.
You need the money you stand to gain from a settlement after being hurt in an accident you didn’t cause. Talk to a Florida personal injury lawyer at The Law Offices of Casey D. Shomo to learn more about filing a personal injury claim. Call 561-659-6366 or fill out the form down below to reach our firm and snag your free case consultation.