Personal Injury Settlements And Maryland Tax Obligations
If you are moving forward with a personal injury lawsuit in the state of Maryland, you may be wondering if you will have to pay taxes on money you receive as compensation for your injuries. Planning for your financial future is recommended. After all, one of the reasons to move forward with a claim or case is to fortify your finances when you are facing mountains of medical debt and other expenses.
A skilled Baltimore personal injury lawyer can look over your situation and let you know what to expect. Of course, they will strive for you to receive the maximum settlement amount. If there is a possibility you will be taxed on lost income amounts, you can connect with a tax professional to learn more about that particular impact.
Most Settlements Do Not Result in You Paying Taxes
Taxes do not come into play when you are compensated for injuries. The situations when taxes may become part of the conversation are when there are compensation for damages beyond personal injury, which could include one or more of the following:
- Lost wage or income compensation
- Settlements connected to interest payments
- Damages due to breach of contract
Disputes handled outside of a courtroom presided by a judge are settlements while a formal court will order damage recovery if a dispute cannot be agreed upon outside of court. That said, both an order and a settlement are typically handled similarly when it comes to tax concerns.
Emotional Pain and Distress
When it comes to pain and suffering compensation, your individual situation will need to be assessed. While emotional distress directly connected to bodily harm is not taxed, there could be taxes involved if it can be proven the pain and suffering is not directly connected to the personal injury.
Discussing the details and intricacies of your accident and what evidence is available with a Baltimore personal injury lawyer is advised. Then, your attorney can lay out all the possible recovery options for you, given your situation. It is likely you will not be taxed for your personal injury settlement, but if it is a possibility your lawyer can let you know so you can plan for your financial future accordingly.
Securing a full and fair settlement after an accident injury in Baltimore or the DC area is a path to financial security. You should not have to worry about added expenses or taxes. In order to go through the process, be sure to discuss all fees and tax implications with a lawyer from your first meeting. Heal yourself and empower yourself with knowledge as you move forward with a claim or case.
Are you wondering what the financial impact of a settlement will be for you and your family? The legal team at Iamele & Iamele, LLP is available to discuss your situation, from car and truck accidents to motorcycle accidents. Our attorneys successfully secure compensation for accident victims in the Baltimore-Washington Metropolitan. We have extensive knowledge and experience in vehicle cases. Contact us today for a free initial consultation.