The loss of a family member or special person through wrongful death is heartbreaking. It is even more difficult when that person dies due to no fault of their own, and you have to pay the medical expenses and other costs you were not expecting.
These situations can include a car accident, complicated medical malpractice situation, or product liability case. Or it may be a result of negligence due to construction site carelessness, an airplane catastrophe, exposure to hazardous conditions at work, or even criminal behavior.
When to File Wrongful Death Claim
No matter what the circumstances, losing someone is never easy. If someone dies due to the fault of another person or corporation, the survivors may be able to bring a wrongful death lawsuit to receive financial compensation. Although it won’t end the emotional distress and pain and suffering, financial support can help.
A settlement amount is important because many times, the damages awarded in a wrongful death settlement may have to last and support you and other survivors for a significant length of time. This is especially if the deceased person was the primary breadwinner in your family.
Type of Compensation
In a wrongful death lawsuit, you can seek compensation for financial burdens that your loved one’s death produced, such as medical bills, funeral expenses, and ambulance rides.
The courts also recognize the damages you and your family have suffered as a result of the tragedy and will compensate you for those losses. These awards you all are eligible for include lost wages from the deceased person, loss of a relationship, and emotional distress/physical illness.
However, there are specific circumstances where the Internal Revenue Service (IRS) has the legal right to tax the wrongful death lawsuit settlement received by family members.
Taxable Monies in Wrongful Death Cases
There is good news and not-so-good news when it comes to what is taxed by the IRS in these types of personal injury cases. The good news is that the Internal Revenue Service considers any portion of a settlement or award that is compensatory as non-taxable. However, there are exceptions when it comes to punitive damages and other suffering you and your family experience.
Compensatory damages compensate you for the wrongful action and restore you to your pre-incident position physically, economically, or mentally. In other words, these types of damages provide monetary support for losses you have already sustained, so the money cannot be considered income for tax purposes.
However, a judge will often award punitive damages to wrongful death cases, which may be taxable. Punitive damages punish the other party for their negligent behavior and prevent others from being hurt by a similar situation.
For example, if a company sells a product for profit that causes consumer deaths, the courts can order them to pay punitive damages if they can prove negligence in selling these products.
In addition, the IRS may be able to collect taxes on medical bills if your income already deducted them from previous tax filings. In some cases, the government may tax you on general damages rewarded to you if you did not suffer an injury or illness yourself.
Of course, there are certain cases where an exception will apply, and punitive damages will not be considered taxable income.
Expert Legal Advice for Taxes on Wrongful Death Settlements
Wrongful death claims can become very complicated and overwhelming, but there is help you can count on to keep you on the right path. A skilled wrongful death attorney can help you navigate the tax implications of your wrongful death settlement. We will work to help you maximize your financial award, so you receive the compensation you deserve.
Our team would love to sit down with you during a free case consultation so we can understand exactly what happened and deliver results in the courtroom. With over $850,000,000 in recovered settlements and judgments, we have the knowledge and tact to fight on your family’s behalf.
You can call our main line at (334).269.3230, and we can transfer you to one of our regional offices located in Alabama, Georgia, Vermont, and Washington DC. We will pair you with a wrongful death lawyer who is ready to care for your family and walk you through this tragedy one step at a time.