Unfortunately, truck accidents are pretty frequent. In 2020 alone, 107,000 large trucks crashed, resulting in injuries. Even though people shouldn’t always prepare for the worst, it’s wise to learn how vehicle accident settlements work if you’re the victim.
Generally speaking, vehicle accident settlements are non-taxable. However, whether you need to pay taxes or not will depend on the type of awarded damages.
Keep reading to discover more about the rules and how a truck accident lawyer can help your situation.
What Are The Types of Truck Accident Settlement Compensations?
You can receive many types of compensation following a truck accident settlement.
Here’s the top four you should know about.
- Medical expenses – Compensation for any medical expenses you had to pay to treat an injury that resulted from the truck accident
- Property damage – Compensation for any property damage you had to fix with your own money and that resulted from the accident
- Wage loss – If you can’t get back to work after the accident, you can receive reimbursement for wage loss, also known as loss of income
- Emotional suffering – A truck accident victim can receive compensation for emotional turmoil. After all, it’s a terrifying and shocking experience.
Which Damages Are Not Taxed?
The compensation received from sickness and physical injury is not taxable under IRS laws. The compensation for property damages you had to cover with your own money is also not taxable.
This includes car repairs and car rental fees. The other types of compensation may or may not be taxed, depending on your situation.
Which Damages Are Taxed?
Awarded damages that generally come with a tax are those for wage loss and emotional suffering. Other types of damages that are taxable are interests and punitive damage.
In the first case, it’s when your damages come with interest. In the second, it’s when the truck driver’s negligence caused the accident, and other parties receive compensation. This damage is usually not rewarded in truck accident cases but is still considered taxable income.
Is Emotional Distress Compensation Always Taxable?
No, compensation for emotional suffering is not always taxable. Generally speaking, the compensation will not be taxed if a physical injury or sickness causes your emotional pain.
One example is a person who starts suffering from depression due to a severe head injury. However, the awarded damages will probably be taxed if not linked to physical pain.
Is There a Way to Avoid Paying Settlement Taxes?
Whether you want to avoid paying taxes or not, the best decision you can make is to consult an experienced attorney early in the process. With their help, you may be able to avoid or reduce the taxes you need to pay.
Because attorneys know the ins and outs of the process, they will also relieve you from a lot of stress and psychological turmoil, especially if you suffered a physical or emotional injury.
Find The Best Truck Accident Lawyer
Finding an attorney you can trust is the key to a successful legal case. Whether you are looking for help for your truck accident settlement case or want a consultation on injury related legal matter, contact Haffner Law today.
We are an experienced and dedicated law firm in Los Angeles, specializing in vehicle accidents, bad faith insurance, personal injury, property damage, and much more. Our team will provide you with the legal representation you deserve and always strive for the best possible outcome.