After getting into a car accident I called Barbara and it was the best decision I ever made. She is amazing! I couldn’t have asked for a better lawyer to represent me. She got me the best settlement to pay back my medi...
The fight with insurance companies is just as hard as fighting for your life after an accident. As long as you dont give up on yourself Barbara will fight for you. The staff at Kidwell and Gallagher were great as well. I...
These two are specialists in two related fields, personal injury and workmen’s comp. Both they and their staff were VERY responsive to me and my questions, and handled my case with patience and competence. I would,...
I feel like kidwell & Gallagher went above and beyond for me. Craig himself and his staff are so nice and helpful. I would highly recommend this law office for your workmans comp/injury needs. You will not be disappo...
The best place to go if you need good hometown lawyers. They are very informative and kept us updated on what was going to happen through out our case.
Was the best experience, we told them the problem and they took over everything, was such a relief. Always there to answer any questions and help is fast is possible.
I was at my job mountain crew changes there in the basement of kidwell and Gallagher
They weren’t able to help with my case, but they directed me to someone who could.
If you have filed a personal injury case and are awaiting settlement, the good news is that you will eventually receive a settlement for your damages. The question that lingers in your mind is whether or not you will have to pay taxes on your settlement.
In Nevada, personal injury settlements are not considered taxable income. The Internal Revenue Service (IRS) generally views compensation for physical injuries or illnesses as non-taxable. However, specific circumstances can affect the taxability of a settlement. It is advisable to defer to a personal injury law firm for better guidance on this legal matter.
The total settlement amount is not merely a lump sum but a sum of various damages. A personal injury lawyer will tell you that each type of damage carries its own tax considerations.
Nevada does not collect state income tax, but the IRS enforces and administers tax laws. Here are the different types of damages within a personal injury settlement and how they affect your tax status.
Medical bills components of a settlement are non-taxable. However, a unique consideration may crop up if you deduct your medical expenses on your tax return while awaiting your settlement. This means that you claimed these expenses on your tax return as itemized deductions while your personal injury lawyer handles the negotiation for damages.
Damages for lost income are taxable, according to the IRS. This means that the compensation you receive to make up for income lost due to the injury is subject to federal taxation.
If an individual had not suffered an injury and their ability to work had not been affected, the government would typically levy income taxes on the sums earned. The compensation received in a settlement to cover lost income is viewed as a substitute for the income that would have been taxed under normal circumstances.
Damages for emotional distress are generally not taxable. Whether it’s pain and suffering or emotional anguish, these sums are considered non-taxable income by the IRS.
The portion of a settlement allocated for property damage is typically not taxable. However, this changes if you receive compensation exceeding the decreased value of your property. In such cases, the excess amount will be subject to federal taxation.
Settlements may accrue interest while awaiting resolution. The interest earned on settlements is considered taxable income. Understanding how interest is calculated and being aware of its tax implications is crucial for accurate financial planning.
These are damages awarded to plaintiffs to punish the at-fault party. They are subject to taxation. This is because punitive damages aim to punish the defendant and not really to compensate the plaintiff for their actual losses.
To effectively handle the tax implications of a personal injury settlement in Nevada, you require an understanding of how different damages may affect your tax liability. We recommend that you seek legal assistance or tax experts. The Kidwell & Gallagher Injury Lawyers will guide you based on the specifics of your case to make proper tax preparations regarding your settlement. Contact us today for a free case evaluation.
Craig W. Kidwell is the managing partner of Kidwell & Gallagher, Ltd., and exclusively represents injured workers in Nevada. Mr. Kidwell has been practicing workers’ compensation law in Nevada since 1999 and has acted as lead counsel on over 2,000 contested workers’ compensation claims. Mr. Kidwell represents injured workers in Nevada through all stages of Nevada’s complex worker’s compensation system. Craig regularly appears in all levels of Nevada’s administrative workers’ compensation system and has represented injured workers in Nevada’s districts and Supreme Court.