Is Financial Compensation Taxable?
Due to a lack of familiarity with procedural matters associated with a civil lawsuit, many plaintiffs are likely to have reasonable concerns and questions about the process. One consideration is the taxability of financial compensation which may be obtained through a successful lawsuit. When one suffers an injury due to the negligence or recklessness of another party, there is typically a variety of expenses to contend with, and this is one possibly compensable issue. Having to pay taxes out of a sum awarded for the payment of medical bills could still leave a family reeling.
If you have been injured by another party’s actions or failure to act in accordance with their duty to you, a civil lawsuit can offer some much needed relief. To learn more about your legal rights and options in this situation, contact the San Diego injury attorneys of Ritter & Associates at (619) 296-0123 to speak with a committed and experienced legal representative.
Financial Compensation which is Taxable
In a typical personal injury case, a successful plaintiff is awarded compensatory damages to address any expenses directly caused by the injury. This might include medical bills, physical therapy costs, lost wages, and pain and suffering. This compensation is untaxed, generally. However, if the plaintiff deposits the funds in the bank, any interest it earns will be taxed.
On the other hand, plaintiffs can also be awarded punitive damages if the defendant acted in a manner that was especially reckless or negligent and the court chooses to punish him or her further. This compensation can be taxed.
To discuss the potential tax implications of a civil lawsuit, contact the San Diego personal injury lawyers of Ritter & Associates by calling (619) 296-0123 today.