Many people who have just gained compensation from a lawsuit wonder if the money awarded to them will be taxable. Use this guide to help you understand the basics of compensation tax law and how it will affect your Asbestos injury claim lawsuit settlement amount.
Physical Injury Claims
Most of the funds recovered from a physical injury claim case will not be taxable. While it is safe to assume this as a general rule of thumb, it is important to consult your personal accountant for the details of your funds. The rules of taxation will differ based on many factors, including what type of claim was filed. Even within a specific case area, such as Asbestos injury, there are many types of claims that can be filed and there is a diversity of tax statuses on those awards.
Exceptions
While most physical injury claims are not usually taxable, there are some exceptions. Two major exceptions to this rule include claims which were filed for mental anguish only or for punitive damages. These claims will be taxable under law.
Play it Safe
The best course of action is to consult your personal accountant for details on the taxation status of your assets. You can also consult a personal injury lawyer to discuss which type of claim you will be filing if you have yet to file your claim.
While the taxation status on different types of claims varies, filing a claim for personal injury is the best course of action in many cases. It can provide closure to a traumatic event, as well as financial relief from the medical and property expenses incurred.
