For the most part, proceeds received as a result of a personal injury claim are not taxable under state or federal law, and it does not matter whether this case was settled outside of court or as a result of a jury Â verdict.
In the majority of situations, the state and federal government cannot tax you for your personal injury claim settlement awards. The reasoning behind this is that since personal injury damages are designed to compensate you for things like medical bills, pain and suffering, lost wages, emotional distress and attorney fees, these are not taxable so long as the money comes from a personal injury or a physical sickness caused by someone else.
There are exceptions to this rule, however, if a breach of contract has caused your injury. Also, punitive damages are always taxable. Your lawyer may ask the judge or jury to separate the verdict into punitive and compensatory damages so that you can account for this. Having an experienced personal injury attorney consult with you during this process could help you better understand how this will influence your financial situation going forward.
You should always consult with not only your New York personal injury lawyer but also an accountant or your tax specialist when you are looking at the possibility of receiving a settlement from a personal injury suit. Setting up meetings with these individuals helps you more clearly understand your obligations and what you are entitled to.
If your case is successful, then a personal injury claim award can help you put your life back together in the wake of a major accident. No person should have to pay the price for anotherâ€™s negligence, but a personal injury damage award might help you get the care you need.
With over 32 years of experience, Jayson Lutzky has the practical knowledge you need in a personal injury case. Mr. Lutzky offers free in-person consultations. Call 718-329-9500 to set up an appointment. Home and hospital visits are available if you have been seriously injured. To learn more about the types of accident cases Mr. Lutzky handles, go to www.MyNewYorkCityLawyer.com.