Some types of settlements are subject to federal and state income taxes while some types aren’t. An experienced mesothelioma attorney can explain tax implications to you before moving ahead with any legal recourse.
Determining Settlement Tax
The old saying about taxes is they’re one thing in life to be certain of. That’s not necessarily true with tax laws and regulations when it comes to lawsuit settlements. To clear up this confusion about what governments might take from a settlement payout, it’s necessary to understand the different types of awards and what they’re specifically made for.
A general rule about taxing settlement awards is that any amounts referring to punitive damage awards are taxable. All other awards paid under personal injury circumstances are not taxable. Then there’s the fuzzy, gray area regarding compensation for loss of income or expected profits with the terms “exceptions” and “limitations” thrown in.
The only thing certain about settlement taxes is this is a complex area. Every person filing a lawsuit in mesothelioma or other asbestos-related illness cases needs representation by an attorney who specializes in this field and knows the tax implications. No one should have to pay more tax than legally required, and an experienced mesothelioma lawyer knows how to negotiate settlements that favor the claimant.