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Posted By Gruenberg Kelly Della || 14-Mar-2019
April 15 is right around the corner, which means millions of people are organizing their finances and sending their returns to the IRS. If your legal team successfully obtained a car accident settlement on your behalf, you may be wondering whether your settlement is taxable or not. In most cases, the IRS does not tax car accident settlements though there are exceptions. Some taxable elements of a car accident settlement may include interest on any award, damages of emotional distress or pain and suffering, payments for loss of wages or work, and most punitive damages.

According to the IRS, “If you receive a settlement for personal physical injuries or physical sickness and did not take an itemized deduction for medical expenses related to the injury or sickness in prior years, the full amount is non-taxable.”

This means your settlement is not considered part of your income, but the best way to protect as much of your compensation as possible is to include tax considerations in any negotiations with the other party. The same regulations apply for settled claims regarding emotional or mental distress, though any proceeds used for a pre-existing illness must be included as part of your income.

Contact Our Car Accident Attorneys Today
As with any legal situation, the answer depends on your particular situation. It is vital you do not miss any payments to the IRS or accidentally double-dip your benefits, and our trusted car accident attorneys of Gruenberg Kelly Della will direct you on the most effective and efficient path to resolution. We refuse to back down from a challenge and will do everything possible to ensure you and your rights are protected. Don’t risk facing this difficult time without us on your side.

Interested in speaking to a success-driven and results-oriented Long Island car accident lawyer? Call us at (888) 305-6372.