Will You Have to Pay Taxes on Your Nevada Personal Injury Settlement?
The best outcome for a victim of an injury accident in Las Vegas is to win your case and get a fair settlement for your damages. Once a victim secures their money, a common question is if it will be taxed. For the most part, the settlement you receive from your Nevada personal injury claim will be tax-free, but there may be specific parts of your settlement that are subject to taxes.
What Parts of a Personal Injury Settlement in Las Vegas Are Taxable?
Getting to the point of obtaining a settlement could have taken you as little as months to as long as years before you were able to come to an agreement on financial compensation. It is important to be prepared that your take-home amount has the potential to be less than what you negotiated. When it comes to personal injury claims in Nevada, a lot of what you reive will not be taxed, but there can be parts of your compensation that are taxable.
One category that can be taxed is money spent on medical treatment. If you claimed the medical treatment you received from your injury accident and were given a deduction, then the money that you were paid through your settlement for that same medical care would be taxed. The Internal Revenue Service says that in situations where physical harm was compensated through a Las Vegas personal injury claim settlement where a victim who received the money from the settlement did not take the itemized deduction for the medical expenses will not have their settlement money taxed. Depending on the extent of your injuries and how long you require medical treatment, the length of time may be substantial. When medical treatment is necessary for over a year, then the cost must be pro-rated.
There are several categories of damages that victims can include in their Las Vegas personal injury claim for compensation. Emotional distress, lost wages, punitive damages, and so on are just some of the damages that can be added to a personal injury claim. The way that these damages are viewed by the IRS differs. Emotional distress, for example, is very common in a personal injury case and if you are including this damage in your claim because of the suffering that you endured as a result of a sickness or injury from your accident, it won’t be taxed. When emotional distress is included in a claim that is unrelated to an injury or sickness, then any amount of money awarded to the victim will be taxed.
Another damage to consider when thinking about taxes is missed wages. Taxes are taken out of your paycheck each pay period. The same principle is true for wages awarded in a settlement. The money for wages that you lost which were paid to you through your settlement must als0 be taxed. Likewise, in rare cases, punitive damages are an extra amount of money added on top of a settlement amount. Punitive money from a settlement will be taxed.
Speak with a Las Vegas Personal Injury Attorney Today
Obtaining a settlement amount is part of the battle victims face, but ensuring that the money they take home is fair and will be enough to cover their expenses is another aspect of working through the Las Vegas personal injury claim process. Matthew Aaron is a Las Vegas personal injury attorney that can ensure the way your settlement is written will account for the damages you suffered while also reducing the amount of taxes you have to pay when everything is said and done. Working with a knowledgeable Nevada personal injury attorney like Matthew Aaron of the Aaron Law Group will ensure that you don’t settle on an unfair agreement that could have major tax ramifications. Call the Aaron Law Group today to schedule your free consultation at (702) 550-1111.