Damages You May Be Awarded Following A Car Crash And How They Are Taxed
If you were injured in a car accident and have filed a personal injury claim, you may be wondering how much money you will receive for a settlement. The amount you receive varies based on several factors and is generally broken down into four different categories. Learning what these categories are, and how they are taxed, will help give you an idea as to what types of compensation you may be entitled to.
Loss of Income
Loss of income is a common type of compensation that someone may receive following a car accident. If you are unable to work because of the accident, you will be compensated for the time you missed. This also comes into play if you are only able to work part-time following your injuries. If you are so injured that you are unable to return to your job, you will receive compensation based on your employable skills and your restrictions. A judge will then make an opinion call as to how long it should take you to find work you can do or retrain into a position that you can do. Lost compensation can also be included in this category. If you regularly receive a bonus, raise or other financial compensation, and miss out on it due to your injuries and inability to work, you will often be awarded this amount in your settlement. If you are awarded loss of income compensation, this money will generally not be considered taxable by the federal government unless the personal injury lawsuit was filed against your employer, such as another employee causing a car crash while you were on a business trip. However, keep in mind that some states will require you to pay state income taxes on your loss of income settlement, so be sure to check with your attorney or tax professional when it comes to this topic.
Medical expenses are one of the most common types of compensation that someone receives in a car crash settlement. Medical expenses are designed to compensate you for any past, current and future medical bills related to the injuries you sustained in the car accident. The medical care you receive is designed to get you as close to pre-car accident condition as possible. As such, if you already have a back injury, and you re-injure your back, the compensation you receive is not designed to heal your back, since it was already hurt. Instead, it is designed to get you to the point you were already at when the accident occurred. Medical expenses may include doctor’s visits, physical therapy, massage, chiropractic care, medications, and any medical devices that may be needed, such as walkers and wheelchairs. The amount you receive varies based on how much your current medical bills amount to and how much medical care your primary treating physician feels you will need in the future. This type of expense is known as general damages and is not subject to taxation.
Punitive damages are awarded if you can prove that the other party has acted negligently. In the case of car accidents, this may include driving while under the influence or driving while texting. These damages are mainly designed to punish the other party for acting in a reckless manner. If you are awarded punitive damages in a case, they are subject to taxes. If you receive punitive damages, you will need to declare them as “other income” when filing your taxes.
Vehicle and Property Damage
Vehicle damage is any damage that your vehicle suffered due to the car accident. This is to compensate you for any repairs or costs that you may be out due to the accident. This is generally not considered a taxable award. Property damage is damage that is done to your property due to the negligence of the other driver. If the other driver ended up damaging your lawn, fence or any other personal property in the accident, they are liable to pay for the damage done to that property. This is not considered taxable either. When determining the amount of compensation you will receive for vehicle or property damage, an insurance claim adjuster will require you to get estimates from a vehicle repair shop or contractors for your property damage.
Everyone wants to know how much they will receive following a car accident in which they were injured. However, there are several factors that come into play and until the case is settled, it can be hard to predict. A car crash attorney like Carl L. Britt, Jr. may be able to give you a rough idea as to what your case is worth, helping to give you a ballpark idea as to what you may be entitled to.