Lardiere McNair DiNicola & Stonebrook, Ltd., LPA represents individuals who have been injured in car accidents and other accidents that are not their fault. LMDS helps the injured individuals assert personal injury claims against the at fault person’s insurance. At the resolution of a client’s personal injury claim, the client’s medical bills, attorneys’ fees/expenses, and all known subrogated interests are paid for by the settlement proceeds. The money that remains is for the client to take for himself or herself for their “pain and suffering”. This take-home amount can range from hundreds of dollars to tens of thousands of dollars. Our clients rightfully wonder – “Do I have to pay taxes on this money?”
First and foremost, Lardiere McNair DiNicola & Stonebrook, Ltd., LPA is comprised of attorneys, and do not hold ourselves out to be certified public accountants. We advise any of our personal injury clients speak with their accountant about the taxability of their personal injury settlement. Nevertheless, the general answer to this question is that it depends on the situation.
As a general rule of thumb, compensation in a personal injury claim that is awarded to an injured party for physical bodily injury or physical illness is not taxable. Yet, there are several nuances that dictate whether or not one’s personal injury settlement is taxable, including but not limited to whether the money is tagged as “lost wages”, “punitive damages”, or compensation for emotional distress that does not arise from the original bodily injury or physical illness. For more information on whether a personal injury settlement or award is taxable see the attached document from the IRS. If you or a family member has recently received a personal injury settlement, Lardiere McNair DiNicola & Stonebrook, Ltd., LPA recommends contacting a certified public accountant to ensure that all laws are being correctly followed.
Taylor Agler is an Associate Attorney at Lardiere McNair DiNicola & Stonebrook, Ltd,. LPA. To read more about our firm, please visit lawyerscolumbusohio.com.