Although no amount of money will ever enable you to get over the loss of a family member, receiving a just settlement for your losses can support you in rebuilding your life. However, wrongful death compensations can result in receiving considerable sums of money, leaving families wondering about how this compensation will impact their taxes and whether it is truly considered income. Thankfully, with an experienced Boston wrongful death attorney on your side, you will not have to tackle these concerns and questions alone. Rather, experienced lawyers can not only help you to fight for the money you deserve after this tragic loss, they can also assist you in determining whether your wrongful death compensation is taxable income.
Types of Awards Following a Wrongful Death
In general, two types of financial awards can be granted following a wrongful death — punitive and compensatory damages. Compensatory damages are usually awarded to compensate a plaintiff for the losses and injuries they endured after an accident. As a consequence, these awards are not taxed by the IRS as these damages are normally not deemed to be income.
On the other hand, punitive damages are different from compensatory damages , as they are awarded for the direct purpose of penalizing the defendant for their egregious acts and preventing the defendant and others from committing these actions again in the future. Therefore, because these awards are not granted to compensate the victim for their losses and harm, the IRS can find punitive damages subject to taxation.
However, it is important to point out that state laws may come into play when deciding which compensations are subjected to taxes following a wrongful death lawsuit. That is why you should consult with an experienced wrongful death attorney regarding your claim as soon as possible. Professional lawyers can help you calculate not only which of these financial losses you can pursue following the loss of a loved one but also how these awards will impact your taxes.
Are Any Parts of a Wrongful Death Case Tax-Free?
Generally, some parts of the award will not be subject to taxes in a wrongful death lawsuit. These include :
- The settlement awarded for medical expenditures
- The settlement awarded for bodily injuries or ailments
- The settlement awarded for emotional anguish as a consequence of the loss of a loved one
- The settlement awarded for lost income that resulted from a wrongful death
However, the IRS can tax settlements used to pay medical invoices and corresponding costs subtracted from income in prior filings and general damages granted to you if you did not suffer an illness or injury. If you have specific questions about your wrongful death lawsuit or would like additional information concerning these tax consequences, you should confer with a wrongful death lawyer as soon as possible . Lawyers can help you determine which possible damages will be tax-exempt and which ones you may end up paying taxes on.
How Can a Wrongful Death Attorney Help Ensure You do Not Pay More Taxes than Required?
Having legal representation for your wrongful death lawsuit can be essential in ensuring you get the compensation you deserve. A reputable Massachusetts wrongful death lawyer can:
- Figure out if you have a reasonable legal claim and what legal alternatives you should pursue.
- Investigate your loved one’s death and collect the evidence to demonstrate negligence and resulting injuries.
- Have professionals verify your claims, such as medics, financial experts, and accident reconstructionists.
- Manage all the negotiations with the other side and pursue a just settlement proposal.
- Take your case to trial and fight for the maximum compensation to which you are entitled if the other side is unwilling to make a reasonable settlement.
- Also, lawyers can use approaches that can help minimize tax results after obtaining a wrongful death compensation, such as assuring that the compensation spells out which portion is for punitive damages and how much is for compensatory damages.
Reach Out to Swartz Law Today for Help
If you have lost a loved one in an accident, working with our Boston wrongful death attorneys can not only help protect your legal rights but also allow you to go after the monetary damages you deserve. That is why you should contact us today for free case consultation and let us show you how our lawyers can help.
If you or someone you know, needs help from a lawyer, contact the law offices of Swartz & Swartz, use our live chat, or send us a message using the form below and we’ll get in touch to assess your case and how we can help.