If you settled your truck accident claim or won your case at a jury trial, you may be worried that you will have to pay federal income taxes on the amount you received. Whether you will owe any taxes will depend on the type of damages you receive.
Understanding the Taxable and Non-Taxable Portions of Your Settlement or Judgment
Settlements and judgments are treated the same when determining whether the proceeds you receive are taxable. Under IRS rules, the damages you received for physical injuries and sicknesses are not taxed. Here are the types of compensation you may receive and whether the proceeds are taxable:
- Medical expenses. The amount you receive to reimburse you for your medical expenses for hospitalizations, surgeries, doctor visits, medications, and other necessary medical treatments are not taxable.
- Wage loss. The portion of your settlement that is to reimburse you for the wages you lost while you were off work recovering from your injuries may be taxed. You could also owe income taxes on future wage losses, and lost earning capacity in the future if you cannot return to work.
- Pain and suffering. If you received damages for the physical pain and injuries you endured in a truck accident, this amount would not be considered income. However, if the amount you received is for emotional distress not related to physical pain and injuries, it could be taxed.
- Property damage. The amounts you receive for car repairs, other property damage, and car rental fees are to reimburse you for out-of-pocket expenses and are not taxable.
- Interest. If a portion of your settlement or judgment is interest on the amount you received, you would owe taxes on this amount.
- Punitive damages. Punitive damages are not commonly awarded in truck accident cases. However, if you received this type of compensation, it would be taxable income.
We Are Here to Fight for the Compensation You Deserve
Were you or a family member injured in a truck accident? You can trust our skilled truck accident lawyers to collect the evidence you need to prove the trucker’s and trucking company’s liability and to fight with their insurance companies so that you receive the compensation you deserve. To learn more about your options and how we have helped other truck collision victims successfully resolve their cases, fill out the online form on this page to schedule a free case evaluation today.