{"id":12352,"date":"2017-09-06T15:45:00","date_gmt":"2017-09-06T15:45:00","guid":{"rendered":"https:\/\/webdemo.icu\/site\/andywins\/?p=11964"},"modified":"2017-09-06T15:45:00","modified_gmt":"2017-09-06T15:45:00","slug":"are-car-accident-settlements-subject-to-taxes","status":"publish","type":"post","link":"https:\/\/webdemo.icu\/site\/andywins\/blog\/are-car-accident-settlements-subject-to-taxes\/","title":{"rendered":"Are Car Accident Settlements Subject To Taxes?"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\"><span style=\"font-weight: 400\">Nobody likes paying taxes. Taxes are a necessary evil and a part of life, but they can also be very complex the minute you step outside of the basic income taxes your job withholds every paycheck. Few things can be more confusing than the amount of taxes you need to pay on your car accident settlement.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span style=\"font-weight: 400\">Still, knowing which parts of your auto accident award are taxable is essential to remaining above board when tax season rolls around. Discover how car accident settlements and judgments work, when you\u2019ll need to pay taxes on them, and how a <a href=\"https:\/\/webdemo.icu\/site\/andywins\/practice-area\/mobile\/car-accident-lawyers\/\">car accident lawyer<\/a> is your best bet.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">Compensatory Damages<\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><span style=\"font-weight: 400\">There\u2019s basically two kinds of damages you\u2019ll get in a car accident award. The first are special damages, which are those damages that can be easily quantified \u2014 the cost of your hospital bills, for example. The second are general damages, which refer to things that are more subjective, like pain and suffering and loss of consortium.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span style=\"font-weight: 400\">Most damages you\u2019ll get awarded in a car accident case are compensatory. That means they\u2019re designed to pay you back for a loss. These can be the payments that cover your medical bills, your transportation to and from rehab, job training costs, and damage to your vehicle or property, among other things. Since they\u2019re paying you back for a direct loss, they\u2019re generally not taxable by the IRS.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">Wages and Compensation<\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><span style=\"font-weight: 400\">Damages you are awarded for lost wages and potential future earnings potential, on the other hand, aren\u2019t strictly compensatory. Rather, they\u2019re replacement income. This means they fill the role that normally your job would fill. You\u2019ll use them for paying bills and the like, but since they are essentially a replacement for your regular paycheck, these awards are taxable by the IRS, at a standard income tax rate based on whatever tax bracket you happen to occupy.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">Punitive Damages<\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><span style=\"font-weight: 400\">Punitive damages are a third classification all on their own. They are also exceptionally rare in terms of awards. Punitive damages are only handed down in the most egregious or brutal of cases. They represent incompetence, irresponsibility or deliberate actions that are so heinous, the perpetrator deserves to be punished for them. By awarding extra money, this increases the burden on the defendant while sending a clear message to never do something like this again.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span style=\"font-weight: 400\">Since punitive damages don\u2019t compensate you directly for a loss, and they represent a sort of \u201cbonus\u201d sum of money that you can use for whatever you like, they are directly taxable as income by the IRS.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">When You Need a Car Accident Attorney<\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><span style=\"font-weight: 400\">Of course, when you\u2019re hurt in an auto accident, the first thing you want to think about is getting compensation, not whether you\u2019ll have to pay taxes on part of it. Getting the best shot at compensation for injuries you suffer in this kind of accident requires representation from an experienced <a href=\"https:\/\/webdemo.icu\/site\/andywins\/practice-area\/mobile\/car-accident-lawyers\/\">car accident attorney<\/a>.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span style=\"font-weight: 400\">If you live in the <a href=\"https:\/\/webdemo.icu\/site\/andywins\/practice-area\/mobile\/\">Mobile, Alabama<\/a>, area and have been hurt by an irresponsible driver, <a href=\"https:\/\/webdemo.icu\/site\/andywins\/meet-the-team\/\">Andy Citrin Injury Attorneys<\/a> can help. We have years of experience helping victims get the compensation they deserve. <a href=\"https:\/\/webdemo.icu\/site\/andywins\/contact-us\/\">Contact us for a free consultation on your case<\/a> today.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Nobody likes paying taxes. Taxes are a necessary evil and a part of life, but they can also be very complex the minute you step outside of the basic income taxes your job withholds every paycheck. Few things can be more confusing than the amount of taxes you need to pay on your car accident [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":15859,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[4],"tags":[],"class_list":["post-12352","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-car-accidents"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.9 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Are Car Accident Settlements Subject To Taxes? - Andy Citrin Injury Attorneys<\/title>\n<meta name=\"description\" content=\"Nobody likes paying taxes. 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