We give each case the time and attention it deserves, and we treat everyone who walks through our doors like family.
From auto accidents to defective product injuries to workers’ compensation claims, we’re here to help Louisiana injury victims.
We value building relationships with the many people and organizations that make Louisiana a great place to live.
Dudley DeBosier has a trusted team of personal injury lawyers who have been helping injured people in Louisiana.
April 6th, 2020
Tax season is upon us once again, bringing up a question
that worries many of our clients, whether they successfully won a settlement
this year, are in the middle of a lawsuit for compensation, or need
compensation after a recent injury:
“Will I need to pay taxes on my settlement?”
Thankfully, for many of you, the answer is “no.”
Just about everything from inheritance to lottery winnings
is taxable as income, including money won in a lawsuit. However, the U.S. tax
code (Section 104) specifically makes an exception for personal injury
lawsuits. This includes workers’ compensation settlements as well.
Examples of lawsuits that are NOT tax-free include:
Essentially, any lawsuit that doesn’t result from or include
physical harm will be taxed. However, accident victims can still sue for
compensation for their lost wages and emotional distress (which are typically
taxed) without paying taxes on the settlement as long as these damages are the result
of a physical injury or illness. It’s important to note the opposite is not
true: physical injuries resulting from emotional distress (such as migraines,
ulcers, and so on) are considered taxable.
This tax-free status is true for settlements reached through
negotiation with the insurance company without going to court, and settlements
ordered by a judge or jury.
Personal injury settlements do not qualify as income, so
they will not affect your Louisiana state tax filing either.
As in any circumstance, there are a few cases in which you
may need to pay taxes on a settlement.
If there is any question over whether a portion of your
settlement (such as interest or punitive damages) is taxable, contact your
attorney at Dudley DeBosier Injury Lawyers. During the settlement process, your
lawyer will specify exactly what portions of what your settlement may be taxed
when discussing possible damages with you, the at-fault party, their insurance
company, and their attorneys, so you aren’t surprised by a 1090 tax form in the
mail after your case ends.
Injuries are stressful, and lawsuits are even more so. At Dudley DeBosier Injury Lawyers, we want to help reduce your stress so you can focus on getting healthy and putting your life back to how it was before the accident. That includes working hard to ensure the money you win stays in your pocket—not the IRS’s. When you contact the team at Dudley DeBosier, you’ll get peace of mind knowing we’ll take care of all those details, so you can get the money you deserve, no strings attached. That’s the Dudley DeBosier Difference.