Wrongful Death Attorney
You already went through a harrowing ordeal with the loss of your loved one. Now that you have won the wrongful death case, you can move on with your own life and try to make sense of what happened. Are you worried about paying taxes on the settlement? Don’t be. Compensatory damages are non-taxable, so there’s no need to worry about that, but there are some other funds you may be taxed on.
Compensatory Settlements That Are Non-Taxable
After a wrongful death, claim has been settled, and the surviving family member has received the compensation, they do not have to pay taxes if:
- The compensation was made directly for the illness or physical injury of the deceased. This is a compensation of loss.
- It covers the costs of medications, health care, health equipment and other aspects related to the end-of-life care required for the deceased.
- Mental anguish and emotional stress are being compensated because they were directly caused by the illness, injury or death of your loved one.
Settlements That Are Taxable
In the case of a wrongful death suit, there are some settlements that can be taxed. These include:
- Compensation for loss of income. This would be considered an income for the surviving family member and would be taxed as such.
- Punitive damages received. To punish the defendant, a court will sometimes order punitive damages to be paid to the plaintiff. This is done when the defendant acted recklessly, or willfully allowed the death.
How You Know What to Pay Taxes On
Contacting a wrongful death lawyer is the best way to learn whether you have a case in which you can seek damages and if you’ll have to pay taxes on the settlement. Every situation is different and will carry with it something the last case didn’t have. You have to keep in mind that every state is different as well, and there could be something such as estate taxes that you haven’t taken into consideration.
Ask your attorney about lump-sum payments and structured settlements. The taxes owed could depend on how you receive payments after a settlement is arranged, and it’s important you understand this so you don’t end up in trouble with the IRS.
Contacting Your Lawyer for Assistance
To get all your questions answered regarding wrongful death and taxes, contact your lawyer today. With legal representation, you can more easily battle the wrongful death world that you should have never been thrust into. Call today to get started with the process.