Taxes on Personal Injury Settlements and Awards
A person receiving an award or settlement for a personal injury case may require those full funds to cover costly medical bills and other expenses. However, if these individuals need to pay taxes on this compensation, they may not be adequately compensated for their injuries. This is especially true considering that these awards can often put individuals in some of the highest tax brackets. As this is a real problem for some individuals, most types of compensation are considered non-taxable by the government.
If you have questions regarding personal injury lawsuits or settlements, contact the Chicago personal injury attorneys of Friedman & Bonebrake, P.C., by calling 312-466-8200.
Non-Taxable Settlements and Awards
The money from settlements and awards are generally considered non-taxable when received by a compensated party. This includes the following types of compensation:
- Injury compensation
- Compensation for medical bills
- Lost wage compensation
- Loss of consortium compensation
- Emotional or psychological damage compensation
There are some instances when these awards are subject to taxation. However, these are most commonly limited to instances when a person will receive interest on their compensation. In these cases, only the interest is considered taxable.
Contact Us
If you have been injured because of another person’s negligent behavior, you may be entitled to financial compensation. This money can prove extremely useful in reestablishing financial stability after an injury. To learn more about your rights and options if injured, contact the Chicago personal injury lawyers of Friedman & Bonebrake, P.C., today at 312-466-8200.