According to the Internal Revenue Service’s IRS rule 1.104-1, you are not required to pay taxes on the settlement amount that you receive for a wrongful death claim. The IRS classifies the wrongful death as a non-taxable settlement because it is part of a claim resulting from personal injury or physical illness.
Understanding the taxable status of your wrongful-death lawsuit settlement can help you maximize your settlement and ensure that it lasts as long as necessary to provide for your family.
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Understanding Taxable Parts of a Wrongful Death Settlement
Certain circumstances can make it difficult to determine if your settlements from wrongful death lawsuits are taxable. IRS does not tax wrongful death settlement. In certain circumstances, the IRS may tax settlement amounts or portions including:
- You can deduct from your income the portion of your settlement that you received as a result of medical expenses and bills.
- “You may qualify for certain portions of the settlement for emotional distress, even if your distress wasn’t caused by an injury or illness.
- The proceeds of a lawsuit or settlements with insurance companies qualify as punitive damage.
Your lawyer can help you determine how to classify each part of your settlement and whether it will affect the taxability of your compensation.
Assigning Wrongful Death Losses
The way courts allocate portions of an award may affect the taxability of settlements in wrongful death suits. The Statute 768.21 explains how the courts will award damages in a lawsuit for wrongful deaths.
- “The loss of support you would have received if your loved one had not been killed.
- The loss of future financial contributions that your loved one would otherwise have made.
- The loss of household services and other services that your loved one would normally have provided.
- The loss of companionship and company of a parent, spouse, or child due to their unjustified death.
- You can claim back the money you paid for funeral and burial costs.
A punitive damage award could make a portion of your settlement taxable. The court awards punitive damages when a person intentionally causes your loved one’s injury or death or acts without regard for how their actions might affect others.
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Qualified Survivors Can File a Claim for Wrongful Death
You can file a wrongful death suit when someone else’s careless or reckless actions cause the death of a family member. If you’re a relative of the deceased, you might not qualify for financial compensation.
Florida Statute 768.18 states that the following family members can sue the party at fault for wrongful death.
- A surviving spouse.
- A biologically or adopted child younger than 25.
- The biological or adopted parent who survives.
- The biological or adopted sibling.
To qualify for financial compensation, a surviving sibling will need to prove that their deceased loved one provided them with some or all of their financial support. Your wrongful death lawyer may be able to help you determine if you are eligible for financial compensation by discussing your relationship with the deceased member of your family.
Protect Your Right to File a Wrongful Death Lawsuit
It takes time to prepare and file a claim for financial compensation resulting from the wrongful death of a loved one. Your wrongful death lawyer will need to take time to collect evidence, identify witnesses, and conduct interviews.
It may be necessary for your lawyer to schedule depositions, locate expert witnesses, and gather all of your medical records. While your lawyer for wrongful deaths builds your case, you may need to take time off from work to focus on physical and emotional healing.
There is a specific time limit in each state that you must meet to file a successful claim for wrongful deaths. Your lawyer may be able to help ensure that the statute of limitation on your case doesn’t expire, which could result in you losing your right to bring a wrongful death case.
We Can Help You Maximize Your Wrongful Death Settlement
You can receive a significant financial settlement if you win a wrongful death lawsuit. The financial settlement you receive is only the beginning of the process to replace the income and support that you lost after losing your loved one. You may need help understanding why wrongful death settlement are taxed versus not and how to maximize the settlement proceeds.
Our wrongful death lawyers can help you maximize your settlement to make it last as long as possible. Contact Tenina Law by calling +12-135-960-265 today.
