Is Financial Compensation Taxable?
Individuals and companies alike are required to pay taxes on the income they receive in a particular year. When considering the possible advantages of pursuing financial compensation through a civil lawsuit, prospective plaintiffs may be uncertain whether any possible financial compensation would be subject to taxation. Fortunately, almost all compensation that one might obtain is untaxed.
Paying taxes for your compensation on top of medical bills and other expenses can be overwhelming. Make sure you consult with a dedicated and skilled legal representative before beginning your case to ensure that you understand your rights and options. Contact a Nashville injury attorney of Pohl & Berk, LLP, at 615-277-2765 to discuss your possible case.
When is Compensation Taxable?
In the majority of cases, financial compensation intended to help pay for medical bills and other damages is not taxable. However, there are some exceptions about which you should be aware. While compensatory damages are free from taxation, punitive damages you receive to further punish the defendant are likely to be taxed. Additionally, any interest your compensation earns while in the bank is also taxable. If you are greatly concerned about the taxability of the funds you might be awarded in a civil case, an attorney can help you to seek a settlement that limits this liability.
At Pohl & Berk, LLP, our Nashville injury lawyers are committed to helping our clients to see justice done when they have been harmed as a result of another party’s negligence. To arrange for an initial consultation, contact us by calling 615-277-2765 today.