If I am Compensated for an Injury – is it Taxable?
Knowledgeable accident attorneys and injury lawyers know that you can will have medical expense and lost wages if you have a motorcycle accident, a highway accident with a semi tractor-trailer, a large truck accident, a wreck with a drunk driver, a truck crash , a construction accident , a fall, or even a battery. Your medical bills and your lost wages are money that you may recover as part of your compensation for the injuries you receive as a result of another person’s negligence.
You may also be able to recover compensation for pain and the inability to live your life the way you want to. Remember compensation means to be made whole- in other words recover the fair amount of what you lost. Some may say that it is not fair to compensate someone for their pain, or the inability to enjoy life. I hear this all the time out of insurance executives and politicians. Remember who is saying this and why. The less the insurance companies have to pay out for just compensation the richer the suits become. When was the last time you saw your premium go down, even though your state has passed so called tort reform. Indiana is silly with tort reform and my rates have never gone down. I bet yours haven’t either. The last thing I want to say about pain is that it is easy for the suits, who get paid obscene amounts of money to say that you should not be compensated for pain. I say let them live in your shoes for a day and they will change their tune.
Compensation for your injuries, medical bills, pain and inability to enjoy life are not taxable. Why, you ask. The reason is very sensible. As the money you receive in compensation is simply to make up for the harm you suffered as a result of another’s negligence, you are not actually getting income. You are simply receiving what makes up for the harm. Now wages are different. You would have been taxed on the wages if you earned them by working, so it is only fair that you pay taxes on them if they are part of the compensation you receive.
If you have a structured settlement as a result of your injuries, the tax code allows the interest on the money in the annuity to be nontaxable if your accident attorney is wise enough to set the structured settlement up properly. If you or your family is hurt by another’s negligence, call Young and Young. Put our families’ 55 years of experience to work for you.