Is a Personal Injury Award Taxable?
Compared to other forms of income, personal injury settlements and awards are treated differently under the tax code. After all, income tax plays a major role in personal finances, as a significant chunk of a person’s wages regularly goes to state and federal governments. However, when receiving a payment from a personal injury claim, an individual may typically gain that entire amount without taxation.
Contact the Wisconsin motorcycle accident lawyers of Habush Habush & Rottier S.C. ®, by calling 800-242-2874 for more information regarding your rights and options as an injured motorcyclist.
Non-Taxable Income Status
Income from a civil claim does not follow a uniform pattern of being non-taxable or taxable. Instead, some types of cases follow the tax code, while others maintain non-taxability. In the case of discrimination, libel, and even wrongful termination, the money is considered taxable. On the other hand, the following types of personal injury awards and settlements are not generally taxed:
- Compensation for medical bills
- Injury compensation
- Emotional distress
- Lost wages compensation
When considering these funds, there is no functional difference according to the tax code as to whether they are granted as part of an out-of-court settlement or through a court-ordered award. Additionally, for tax purposes, the government does not care whether compensation comes in structured payments or in a single sum. However, if there is interest attached to these funds, the interest may be subject to taxation.
If you have been injured in an accident because of another motorist’s negligent behaviors, you may be eligible to pursue compensation by filing a personal injury claim. To discuss the details of your claim with an experienced legal advocate, contact the Wisconsin motorcycle accident attorneys of Habush Habush & Rottier S.C. ®, today at 800-242-2874.