Is a Personal Injury Award Taxable?

The federal government, some states, and even some cities impose a tax on the income that one earns or receives. When an individual has been harmed in an accident, he or she may be faced with significant expenditures and an inability to work, creating a period of intense financial distress. In some cases, an injured party may seek and obtain an award through a personal injury lawsuit, and the potential for taxation is important to consider. Typically, personal injury awards are free from taxation, giving the entire amount to the recipient.

If you have suffered an injury from a motorcycle accident and believe someone else was responsible, you may be eligible for financial compensation to pay for damages. Contact the Iowa motorcycle accident lawyers of the Pete Leehey Law Firm, P.C., at 877-209-9452 to schedule a free consultation to discuss your legal options.

Non-Taxable Income

Not all income or awards from a civil claim follow the same set of rules for taxation. Some portions of a settlement may be taxable. For example, some courts hold that awards for attorneys’ fees may be taxable, but this is not true in every case. The following parts of a personal injury award are typically tax free:

• Compensation for an injury
• Emotional trauma
• Compensatory damages for medical bills
• Lost wages

Your personal injury awards can come in one lump-sum payment or in monthly installments. This does not affect whether or not your awards are taxable or not.

Contact Us

If you or someone you know has been injured in a motorcycle accident caused by someone else’s negligent actions, you may be eligible for financial compensation. Contact the Iowa motorcycle accident lawyers of the Pete Leehey Law Firm, P.C., by calling 877-209-9452.