Is Financial Compensation Subject to Taxation?
Injuries caused by auto accidents, faulty products, or unsafe premises can create a difficult situation for you and your family. Not only can you suffer physical and emotional trauma, but you may also experience financial struggles due to medical bills, lost wages, and other damages. Fortunately, you can take legal action against the party at fault for your injuries to recover financial compensation to pay for these damages. However, one question many people have about financial compensation is whether it is taxable.
After having to pay medical bills and other expenses in the aftermath of a personal injury accident, paying taxes on your settlement may seem overwhelming. However, most financial compensation is not taxed. If you have questions about financial compensation in your personal injury case, contact an Oklahoma injury lawyer of the Abel Law Firm today at (405) 239-7046 and get started on building your case.
In the majority of personal injury cases, the financial compensation that plaintiffs recover is exempt from taxation. This includes compensation to pay for the following:
- Past and future medical bills
- Prescription medication and rehabilitation costs
- Pain and suffering or emotional trauma
While these damages are tax-exempt, there are some exceptions you should be aware of, such as compensation for lost income. Additionally, the interest that you may earn on your settlement is taxable along with punitive damages you may receive.
If you have been hurt in an accident caused by someone else, the negligent or careless individual at fault for your suffering may be obligated to cover your damages. To learn more about your legal options after a personal injury accident, contact an Oklahoma injury lawyer of the Abel Law Firm at (405) 239-7046.