Once you receive an injury compensation or accident settlement in Decatur or Atlanta , you might be wondering if you’ll need to pay taxes on it. Your personal injury lawyer should be able to advise you as to the rules, regulations, and laws surrounding settlements or judgment awards from accident claims. These regulations vary depending upon the type of compensation or settlement that you receive.
For instance, personal injury compensation for a physical injury is not taxable under federal or state law. If you file a personal injury claim and receive an accident settlement before trial, or a judgment award for injury compensation at trial, you do not have to pay taxes on the amount.
The personal injury compensation that you receive is meant to reimburse you for medical bills, lost wages, loss of earning capacity, emotional distress, pain and suffering, court costs, attorney’s fees, and loss of consortium. If your personal injury claim is not based on a physical injury, but instead is only based upon a breach of contract issue or emotional injury, your injury compensation might be taxable.