When you get to the end of your auto crash case in Henderson and you receive what you are entitled to either in a settlement or jury verdict, it can be a huge relief to put your accident ordeal behind you. However, there is one more matter to consider. Is the amount you received taxed by the IRS?
Taxability of Settlements in Henderson Car Accident Cases
If you suffered injuries caused by a negligent driver, you are entitled to be compensated for your medical bills, lost wages, and pain and suffering. In the majority of car accident cases in Henderson, the settlement proceeds are paid to the victim in a lump sum settlement where all the compensation is lumped together in one payment with no specific designation as to what the amount is for. If you received your settlement in this fashion, you most likely would not owe any federal taxes on it.
Are Amounts Awarded by a Jury in a Car Accident Case Taxable?
It can be more complicated to determine whether you owe taxes on the judgment awarded to you at a jury trial. If the jury designates specific amounts for medical bills, lost wages, and pain and suffering, some of the amount you receive may be taxable. Here is how it could work:
The amount awarded to reimburse you for medical expenses would not be taxed.
The lost wages portion of your award would be to make up for the paychecks you did not receive while you were off work recovering. Like your wages, you will owe taxes on this amount.
Pain and Suffering
Compensation for pain and suffering is more complicated. Any damages you receive for the physical pain and suffering is not taxed. This is commonly what a pain and suffering award is for. However, if any amount is being paid to you specifically for emotional distress, such as anxiety, depression, or other psychological conditions, federal taxes may be owed.
Punitive damages are a much rarer type of compensation that is only given when the at-fault driver’s actions are grossly negligent. They are designed to punish the other party and not to compensate you. Because of this, you would owe taxes on any amounts the jury designated as punitive damages.
Have You Been Involved In A Henderson Or Las Vegas Car Accident?
If you've been injured in a car accident you need to speak with an experienced car accident lawyer as soon as possible. Contact us online or call our Henderson office directly at 702.405.6000 to schedule a free initial consultation.