What is Taxable in a Florida Personal Injury Claim?

What is Taxable in a Florida Personal Injury Claim?

The way that victims can secure money to pay for the damages they suffered in a Florida injury accident is through a Florida personal injury claim. Orlando’s personal injury claim process can be unpredictable and anything can happen which can complicate the process. On top of this, the insurance providers are going to be fighting their hardest to devalue a defendant’s claim and finding ways to deny it.  When a victim has sustained injuries, the stress of going through the personal injury claim process in Florida may at times feel unbearable. When a victim works with a Florida personal injury attorney that has a thorough knowledge of the law and how to handle deceitful insurance companies victims can at least focus on their health until they obtain a settlement.

After a settlement has been secured, and the process has come to an end, victims can breathe a sigh of relief. If you were injured in an accident by a negligent party in Orlando, the Vaughan Law Group can help you build a strong personal injury claim for all the damages you suffered. It is important that what you take home is fair based on what harm you had to endure and part of that is making certain that the way your settlement is written will impart the smallest tax burden possible.

What Parts of a Florida Personal Injury Claim Are Taxable?

What is Taxable in a Florida Personal Injury ClaimA Florida personal injury claim includes many different damage categories.  Depending on how or why they are paid, and the way that the Internal Revenue Services views them, will determine if they are taxable or not. Some damages are exempt from taxes while others are subject to being taxed. The following damages are exempt from taxes:

  • Money for medical treatment for injuries caused by the accident. Only in cases where the victim didn’t claim an exemption for the medical care prior to securing their settlement.
  • Compensation for emotional pain and suffering as a result of a bodily injury or a sickness that resulted from the accident.

These damages can and will be taxed by the IRS:

  • Punitive damages are added to a settlement amount when the incident was so egregious a judge decides that the victim deserves more money and the defendant be punished financially. Because these damages are extra the IRS considers them income and are therefore subject to taxation.
  • Interest accrued that is included in a Florida personal injury claim will also be categorized as income by the IRS and so taxes will be assigned.
  • Any wages you earn from your job are taxed. When you are paid for wages you lost out on because you cannot work and then that amount is included in your Florida injury settlement, the IRS will collect the correct amount of taxes from them. Additionally, if you are specifically awarded money for wrongful termination, that amount will be taxed.
  • Money for emotional duress that is not linked to a physical injury or a sickness will be taxed.
  • Financial compensation for discrimination actions against you will be taxed.

Speak with an Experienced Orlando Personal Injury Attorney Today

Taxation rules are complex and there are many ins and outs that may seem nuanced but can have a major impact on a Floridian’s tax burden. Call the Orlando personal injury lawyers at the Vaughan Law Group to schedule your free consultation and learn more about how to maximize the compensation you receive in your claim. The Vaughan Law Group can be reached at (407) 648-1426.