Paying Taxes for Wrongful Death Damages

When someone you love dies at the hands of another person, it’s only reasonable you get compensated for the death and suffering. When you hire an attorney, you’ll be paying a contingency fee, as well as other fees associated with the court proceedings. Will you also be paying taxes on your settlement? It depends on what the damages are for.

Compensatory Damages

When a court rewards you damages as compensation, it will not be taxable. This is because in theory, you will use that money as compensation for costs you already had to pay as a result of the injury or death. For example, your settlement may not come for a couple years after your loved one dies. At that point, you would have paid for his or her medical expenses before death. That may include an ambulance ride, emergency room visit, multiple physician services, a hospital stay, physical therapy, emotional therapy, medication, and more.

Aside from those medical costs, you may have ended up having to pay for a funeral. That could include costs for the funeral home, music, flowers, a family meal, burial and more. You may have also had to pay for home renovations because of the extent of the injury, so your loved one could live comfortably before his or her passing. All of those costs could be compensated at the end of a court trial, and none of it would generally be taxed.

Punitive Damages

Damages that would typically be taxed are those that are considered income. If your loved one brought home a paycheck, you may be awarded compensation for lost wages. If you suffered severe emotional distress due to the death, you may receive a payout for the distress. There are other punitive damages that could be taxable as well, depending on whether or not the court feels you and your family deserve it because of gross neglect displayed by the guilty party.

Hiring a Lawyer for Assistance

While punitive damages are taxable, compensation is not, and that is often the greatest portion of the damages. If you’re worried about having to pay too many taxes on your wrongful death award, contact a wrongful death lawyer to walk you through the process. It may help to see everything written down in front of you, and then you’ll probably realize how important it is to hire a lawyer and seek the damages you and your family deserve. Contact and hire a lawyer today to get started.

 

Source: Wrongful Death Lawyer Phoenix, AZ, Rispoli Law

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