Settlements for wrongful death are frequently huge sums of money. When a family receives such a large sum of money, they may worry if they must report the settlement as income on their tax filings.
A wrongful death settlement is usually not counted as income. As a result, the sum is not taxed in most situations, as per the Internal Revenue Service (IRS). However, some aspects of the settlement may become subject to taxation.
- Are Wrongful Death Settlements Taxable? Ehline Law Knows the Answer
- The Taxable Portions of Wrongful Death Settlements: Understanding the Details
- Assigning Wrongful Death Losses
- Safeguard Your Capacity to File a Wrongful Death Suit
- Qualified Surviving Kin Can File Wrongful Death Cases
- Want to Maximize Your Wrongful Death Settlements? Contact Ehline Law Firm Today!
As per IRS Rule 1.104-1, the settlement amount you obtain in a wrongful death claim is not taxable. The wrongful death compensation is tax-free since it is part of a claim for personal injuries or physical illness, according to the IRS.
Understanding the taxable state of a wrongful death case payment can help you make the settlement last as long as possible as well as provide for the family’s needs.
The Taxable Portions of Wrongful Death Settlements: Understanding the Details
Specific conditions can make determining whether or not your wrongful death case payouts are taxable more difficult. Your wrongful death lawsuit compensation is not taxed by the IRS.
They may tax other settlement portions or payments in certain instances, such as:
- The amount of your settlement that was withheld from your income in previous years for medical bills and costs.
- You may become entitled to a portion of a settlement for emotional anguish if the distress was not caused by a personal injury or disease.
- Punitive damages are funds received as a result of a wrongful death lawsuit or an insurance settlement.
Your wrongful death attorney can explain how each element of your wrongful death lawsuit settlement gets classified and how it may influence the taxability of your payout.
Assigning Wrongful Death Losses
The taxability of a wrongful death settlement may get affected by how courts distribute elements of a wrongful death award.
In a successful wrongful death action, Florida Statute 768.21 specifies how courts pay losses:
- Financial support lost as a result of a loved one’s unfortunate death.
- Financial contributions that your loved one would have made in the future are now lost.
- Loss of home and other services provided by your loved one.
- The loss of a spouse’s or parent’s companionship and company as a result of the wrongful death.
- Anguish resulting from the wrongful death of your loved one on an emotional and mental level.
- Money you spent on your loved one’s funeral and burial expenditures.
If you receive a punitive damages award, you may have to pay taxes on some of the compensation. Punitive damages get awarded when the individual who caused your loved one’s injuries or death did so knowingly or without concern for how their actions would affect others.
Safeguard Your Capacity to File a Wrongful Death Suit
It takes time to develop and file a claim for financial compensation following a loved one’s unfortunate death. You and your wrongful death attorney need time to collect evidence, seek witnesses, and question them.
Your lawyer may want more time to identify expert witnesses, compile all of your medical documents, and schedule any necessary depositions. While your wrongful death lawyer works on constructing your claim, you might need time to focus on your physical and mental rehabilitation.
Every state has a statute of limitations that governs how long you have to file a successful wrongful death claim. People refer to this period of time as a statute of limitations, which your attorney may explain. He or she might be able to help you avoid losing your right to pursue a wrongful death action if the statute of limitations on your case expires.
Qualified Surviving Kin Can File Wrongful Death Cases
When a family member dies as a result of someone else’s negligent or thoughtless behavior, you can bring a wrongful death claim. However, not everyone related to the deceased individual is eligible for monetary compensation for the wrongful death.
To be eligible for a monetary reward, a surviving sibling must show that their departed loved one offered some or all of their financial assistance. Your wrongful death lawyer may be able to help you assess whether you are eligible for financial compensation by discussing your relationship with the deceased family member.
Want to Maximize Your Wrongful Death Settlements? Contact Ehline Law Firm Today!
A successful wrongful death claim can result in a sizable monetary settlement for you. Winning a monetary settlement is merely the first step in restoring the support and income you lost when a family member died. You may also require advice in determining whether wrongful death lawsuit settlements are taxable or tax-free, as well as how to maximize the value of a settlement.
Call Ehline Law To Learn About the Tax Implications for Surviving Family Members
With the assistance of our friendly and charismatic wrongful death law firm, you may maximize your settlement and make your monetary reward endure as long as feasible. Call Ehline Law Firm today at (213) 596-9642 for aggressive legal representation regarding your wrongful death claims.
