Taxes can be a serious downer when it comes to receiving money. You think you’ve won a sizeable settlement only for a large portion of it to be taken away by the government. When you file a personal injury claim in Baton Rouge, Louisiana, you may not consider how the government will tax your money. But if you think about taxes ahead of time, you can save yourself a lot of frustration.
At Spencer Calahan Injury Lawyers, we’ll work hard to get the most out of your claim. A Baton Rouge personal injury lawyer from our team will assess the tax laws in relation to your claim from day one. That way, you can feel confident about your payout and know you’re obeying the law.
Taxes on Awards for Economic Damages
Economic damages make up a large part of many personal injury settlements. Thankfully, the government won’t tax your award for medical expenses unless you received a deduction for these expenses in previous tax years. If you received a deduction, then you must pay back taxes on this award.
Because you would have paid taxes while working, you must pay taxes on any award you win for lost wages. This money will go to the federal government for social security and medicare benefits. Your tax amount will depend on the job you held before your accident.
Any money you win for damage to your personal property won’t get taxed unless you receive more money than your property is worth. You will get taxed on any money you receive in a personal property award that exceeds the value of your property.
Other Taxes You Must Pay for Your Settlement
If you win punitive damages in your claim because of a grossly negligent defendant, then you must pay taxes on this award. It’s also possible that you’ll win interest in your claim depending on how long your lawsuit lasts in court. If you win interest on your settlement, the interest will be taxed.
Reach Out to a Personal Injury Lawyer in Baton Rouge
Having an experienced lawyer by your side as you navigate the claims process can be crucial. Not only will your lawyer work hard to maximize your settlement, but they can ensure you pay the correct taxes for every award you win. If you’d like to schedule a free consultation with a Baton Rouge personal injury lawyer from Spencer Calahan Injury Lawyers, call 225-387-2323 or fill out the contact form below.