Personal Injury Settlements and Georgia’s Tax Laws
After completing the 2018 tax season, taxes still remain top of mind for most people. Since most people try to avoid particular penalties and legal ramifications related to filing, it’s imperative to understand how to approach or declare personal injury settlements.
If you file a personal injury claim against another person or party, odds are that the matter will be settled out of court. Once you accept a reasonable offer provided by the negligent party, the case is classified as “settled.” From here, the responsible party issues payments, your attorney’s contingency fees are deducted, and you claim the remaining value. What happens after this as it pertains to announcing your annual income to the Internal Revenue Service (IRS)?
Georgia’s Tax Laws and Personal Injury Awards
For personal injury victims in Georgia, the proceeds from a related claim are generally not taxable under state or federal law. Regardless of whether you settle your claim in or out of court, neither the state nor the IRS are able to accept a portion of the settlement.
Consider the following types of damages that are not taxable under state or federal law:
- Lost income
- Medical bills
- Loss of consortium
- Emotional distress
- Pain and suffering
- Damages for an occupational disease
- Attorney fees related to personal injury awards
Exceptions To State or Federal Tax Laws
There are three particular exceptions when it comes to taxing a personal injury settlement:
- Physical damages or health conditions that are connected to a breach of contract lawsuit
- Punitive damages
- Interest on judgement
Contact Fast Help For More Information On Tax Laws and Injury Settlements
If you have any questions relating to state or federal tax laws as they pertain to a personal injury settlement, contact Fast Help for immediate support. Our Atlanta accident injury attorneys provide free consultations and are available 24 hours a day. Just dial (404) 592-0318.