23 May, 2022
Imagine you just received full compensation for being involved in a trucking accident. You can use this money to fix your car, pay medical bills, or buy a new car. But you may be thinking, “Do I have to pay taxes on my settlement?” Fortunately, the short answer is no. You won’t have to pay taxes on most motor accident settlements.
However, there are cases where some of your compensation is taxed. To fully understand how much of your settlement is taxable, reach out to a personal injury attorney or a tax attorney.
There are several different types of compensation you can collect in a truck accident settlement. The first is measurable and objective, which are your medical bills and lost wages. You may also be able to collect emotional damages, which include any pain and suffering you endured.
As part of a personal injury settlement, you can receive compensation for surgery, hospital stays, and physical therapy. The victim usually has to pay medical expenses out of pocket. So, any payment you receive for medical expenses or injuries is not taxable. The money you are receiving is a reimbursement, not actual income.
Any compensation you receive for vehicle damage resulting from a motor accident is not taxable. The payment covers the amount it costs to repair your car or reimbursement from a rental car. Similar to medical expenses, you are getting reimbursed for out-of-pocket expenses.
After a motor accident, victims may be in considerable pain for a significant amount of time. Hospital stays, doctor visits, and physical therapy appointments can force the victim to take a lot of time off work. Any compensation you receive for lost income is tax-deductible. Your regular income is taxed, so any payment you receive from loss of wages is also taxed.
An accident is a shocking event that could bring much emotional distress. Compensation for emotional distress is tricky when it comes to what’s taxed. This form of compensation may be taxable, depending on the situation.
For instance, if you’re in a car accident and sustain severe back pain. You may fall into a depression that requires medicine and regular therapy visits. Since your distress comes directly from the injury, these costs will not be taxed.
However, say you’re in a car accident and witness your child or spouse become seriously injured. Watching a family member get hurt is very traumatic, and you may receive compensation for it. Since the damage in this example does not arise from your physical injury, this compensation is taxable.
It’s rare for punitive damages to be part of a motor accident settlement. This category of personal injury damages is a punishment against the defendant, and they get awarded if the defendant engaged in outrageous behavior. In any case, punitive damages are always taxable.
The rules about paying taxes on your truck accident settlement can be complicated. Once you receive your compensation, it’s essential to speak with your attorney before filing your tax returns. A top-rated personal injury attorney at The Barnes Firm can help navigate your case’s complexities and answer any questions you may have.
At The Barnes Firm, our top priority is ensuring that all our clients receive high-quality representation. We’ll fight for you to receive the compensation you deserve and help you understand what part, if any, is taxable. Reach out to The Barnes Firm to discover all the ways we can help you after a motor accident. Complete our online contact form or call us today to schedule a free consultation.
The Barnes Firm (800) 800-0000
“As President of The Barnes Firm, I have dedicated my career to achieving justice in hundreds of cases for the victims of injuries caused through the fault of others. Additionally, I have been honored to have been elected Best Lawyer and a Super Lawyer”
Years of Experience: 30+ years
Getting our clients the best results possible.
or call us at(800) 800-0000
The Barnes Firm is here to help you. Our personal injury firm helps individuals and their families who
have suffered an injury in an accident.
Explore Articles Related to Your Situation
We are always available to discuss your case. Give us a call at (800) 800-0000.
Fill out our form and we will contact you shortly to discuss your case
Our attorneys will come to your home, office or hospital at your convenience.
We are available anytime, including after hours and