If you’ve been in a car accident, you know how exhausting and tedious it can be to manage your physical recovery and seek compensation for damages in court. Because personal injury cases tend to take some time, you have probably been forced to absorb all costs related to your accident. You may be scraping the bottom of the barrel to cover the cost of hospital bills, medications, therapy, etc. and you are likely looking forward to having a settlement check in your hands. However, before you rush to spend it all on attorney fees, medical bills, and car repairs, keep in mind that you may be required to take taxes off the top.
In the majority of cases, you will not be required to pay taxes on your settlement. This is because settlement amounts are usually structured in order to reimburse you for costs related to damages and are unlikely to have a substantial impact on your income. (In other words, a car accident case settlement isn’t designed to make you a millionaire.)
When you sue for punitive damages and receive a settlement that will significantly increase your income, it may be subject to taxation. Compensation for damages that are not related to your injury may also be taxed, even if it does not greatly enhance your financial status. However, broadly speaking, amounts awarded for damages directly related to your injury will not be taxed, though this will depend on the circumstances of your case.
If you’ve been in a car accident, your next steps are critical. After receiving immediate medical attention and conducting an assessment of the damage, get in touch with experienced Clearwater car accident attorney Bryan Caulfield. With an Avvo rating of 10.0 and high standing as a Top 100 National Trial Lawyer, he is well-equipped to help you work toward getting the settlement you need to make a full recovery after your accident. He also serves the Tampa Bay area.
Call (727) 308-6060 or contact us to receive a free case evaluation today.