Will I Have to Pay Taxes on My Personal Injury Settlement?

When suing for damages in Denver, you likely won’t consider whether the government will tax the settlement you receive. Although most of your money won’t be taxed, knowing both the state and federal tax laws on your money is essential because it can play a huge role in how much money you demand and how much money you receive. 

Taxes are confusing, and complying with the law is necessary. When you work with a Denver personal injury lawyer from Justice for Colorado, you can feel confident that your money is in good hands.

Your Economic Damages

Regarding medical expenses in your lawsuit, you don’t have to pay taxes on this award unless you’ve deducted medical expenses as an itemized deduction in previous years. When you win a settlement for lost wages, you must pay income tax on this portion of your settlement. You’ll also have to pay social security and medicare tax on this money.

If you recover money for property damage, you won’t have to pay taxes on this money unless your settlement has a value that exceeds than the property you lost. If your settlement value is more than the property you lost, the extra amount will be taxed.

Non-Economic Damages

Awards for non-economic damages aren’t taxable. The exception to this rule is if you received an award for emotional distress that isn’t directly related to a physical injury. In this case, your award may be taxable. 

Speak with a Denver Personal Injury Attorney

Taxes on lawsuit settlements can be complex. When you need guidance on how to pay your taxes, you should speak with a Denver personal injury lawyer from Justice for Colorado. We can assess your tax situation on the front end so we know how much money to fight for. If you’d like to speak with our team, you can schedule a free consultation. Call 303-647-9691 or fill out the contact form below to get started.

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