2006-10-07 11:42:46 · 5 answers · asked by urmyfavorite 2 in Politics & Government ➔ Law & Ethics
For a settlement to be tax-free, it must be meet two requirements:
One) A physical injury or illness must have occurred. Without either, the proceeds are taxable. "Distress" is not a physical injury, but a stress disorder resulting from an accident is.
Two) The injury or illness must be the result of a tort - meaning a wrongful act, injury or action.
A med mal settlement meets both of these requirements and will be totally tax free.
But if you received compensation for loss of earnings, etc ... that portion of the settlement will be taxable. The good news is that your lawyers cut is an itemized deduction.
A real smart lawyer who knows what he or she is doing will structure things to your advantage whenever possible, for example dropping the wage claim entirely and taking a lump sum settlement with no allocations.
2006-10-07 12:13:43 · answer #1 · answered by BoomChikkaBoom 6 · 0⤊ 0⤋
definite, I agree we pay too a lot in taxes. yet imagine about what would not receives a fee if there wasn't a familiar tax cost: - police, fireplace, and emergency amenities - practise - the militia and protection - clinical progression and consider once there is not any funds to come back in to commence paying for those issues, human beings might want to be complaining that the amenities are not presented! the challenge to keep in mind is that the federal authorities isn't an entity to itself. that's component to u.s. like you and that i. that's made from folk who're our fellow electorate and run with funds from all of our exertions. that is *no longer* a topic the position the undesirable peasants are operating to help the feudal lord and they are stressful further and extra. each and each piece that you install, you receives some thing again in go back.
2016-12-04 09:29:15 · answer #2 · answered by ? 4 · 0⤊ 0⤋
I'm almost certain the answer is "no". It's not income. It's a settlement. Like life insurance policies, when collected, are not taxable. But just to be certain, do check with an accountant.
2006-10-07 11:50:57 · answer #3 · answered by Anonymous · 0⤊ 1⤋
Are you kidding me?? Of Course
2006-10-07 11:51:14 · answer #4 · answered by DeltaQueen 6 · 0⤊ 1⤋
No, can you believe it.
2006-10-07 11:45:40 · answer #5 · answered by beez 7 · 0⤊ 1⤋