As the old saying goes, “there are two things in life you cannot escape – death and taxes.” So, if your personal injury case has been resolved, you may be wondering if the IRS is going to be entitled to any of your financial settlement.
You shouldn’t be paying taxes unless you’re making a recovery that is income-related. Such as lost wages, or a reduced earning the capacity type of claim. If you’re making other types of claims, such as physical impairment, pain, and suffering, loss of enjoyment of life, or anything that does not have a financial component, you should not be paying taxes on your recovery. A settlement payment may consist of multiple types of damages. For example, an agreement may include allocations for back pay, emotional distress, medical expenses, and attorneys’ fees.
Generally, the IRS will not disturb a settlement that does not compensate a client for lost wages or income, so call The Peña Law Firm and they will help you keep all the money you deserve.
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