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How Much in Taxes Will Compensation Cost You?

For many people considering filing for financial compensation after sustaining an injury because of someone else’s negligent or reckless actions, some important practical questions may arise. In particular, the issue of taxes may be a major concern for many people who don’t know if they can afford to pay additional taxes. However, to a claimant’s relief, the vast majority of personal injury compensation is considered non-taxable by the federal government.

If you’ve sustained an injury due to another person’s errors and have questions before you want to move forward with a claim, we may be able to provide you with some answers to those important concerns. For more information about your claim and how we may be able to better prepare you, contact a Stevens Point personal injury lawyer of Habush Habush & Rottier S.C. ® today by calling 800-242-2874.

Taxes and Personal Injury Compensation

For most personal injury cases, taxes don’t factor into compensation for claimants. Instead, compensation is provided as non-taxable income to the claimant, helping them better cover the costs of an injury completely. However, the following instances present an exception to this rule:

  • Interest built up on personal injury damages
  • Non-injury damages, such as libel and slander
  • Punitive damages, or damages won due to a seriously negligent act

These exceptions provide that the claimant will be responsible for taxes on only the applicable parts of compensation. For example, if a person receives interest on their damages, they’ll only pay taxes on that interest. The sum of the compensation excluding that interest will still go untaxed.

Contact Us

You may be left with some questions about your personal injury claim options after an injury that deserve an answer from a legal professional. To discuss these questions in depth with someone who is ready and able to better explain what to expect before you file, contact the Stevens Point personal injury attorneys of Habush Habush & Rottier S.C. ® today at 800-242-2874