Maison Law helps people with the legal process after they’re injured in California. We’re here to answer any questions you might have, which includes what needs to be done with any settlements you get. Tax implications are something that often gets overlooked, but it’s still important. To learn more about your options, contact us today for a free consultation.
Do You Have to Report Personal Injury Settlements to the IRS?
A settlement from a personal injury claim means a lot to you and your family. It can not only take care of immediate financial needs, but potentially set you up for the future. For many clients, the settlement check they receive is the most money they’ve ever been given at one time.
While you might think a settlement check is considered income, not all of it actually needs to be reported to the IRS. This can get a bit confusing, though. Usually, you receive a settlement in one lump sum. But your settlement is made up of different damages. Under federal tax laws, medical expenses, pain and suffering, emotional distress, and loss of quality of life usually do not need to be reported to the IRS because they are not considered gross income.
On the other hand, things like repair/replacement costs for your vehicle or other damaged property, lost wages, or punitive damages do need to be reported to the IRS.
While we can help you receive a settlement, we aren’t necessarily equipped to provide tax advice. Thus, your best bet is to talk to an accountant when you receive your settlement to make sure everything that does need to be reported to the IRS is reported and you can avoid penalties.
How Do You Recover Damages in a Personal Injury Claim?
You obviously never want to be injured in any type of accident. That said, it’s a common occurrence in California, whether it be a car accident or a slip and fall. This gives you certain legal options, namely the ability to file an injury claim and recover “damages” from the person responsible.
These damages, as covered above, relate to your specific injuries and other losses. They generally include things like:
- Medical expenses
- Lost income or earning potential
- Repair/replacement costs for damaged property
- Pain and suffering
- Emotional distress
- Loss of quality of life
- Punitive damages (in cases of intentional negligence)
In order to recover these damages, you have to file a claim. Typically, you either do this by filing:
- An insurance claim out of court
- A personal injury lawsuit inside the court system
An insurance claim is less formal, and usually wraps up much quicker. However, it’s totally controlled by the insurance company, which has the overall goal of reducing its costs. Thus, while they offer you a settlement, it usually won’t cover all your damages. That’s when you can file a lawsuit. The catch is that it takes more time and effort. Still, it’s a much more impartial process that’s overseen by a judge, meaning you can get a fairer result for your particular losses.
But there’s another hugely important aspect of a claim in California: filing within the statute of limitations. In California, you have to file your claim within two years of the date of the accident to be able to recover damages at all.
How Can You Get the Most Out of Your Claim?
There’s two main ways to make sure you get the most out of your injury claim in California: doing the right things after the accident to form the foundation of your claim and having the right legal guidance.
This starts right after the accident itself. You need to do the following to set up your claim and protect it:
- Call 911 for an ambulance
- Call the police or report it to the property owner (like a store employee or homeowner)
- Gather evidence and information from others involved, like insurance and pictures
- Get further medical care for more extensive injuries
- Keep track of your expenses and other losses
- Don’t admit fault
After these are taken care of, you can start thinking about the legal process–and whether or not you need a lawyer. This usually depends on how hurt you are or how complicated your case is. No matter what your needs are, our team can help you by:
- Investigating the accident to figure out liability and all sources of your potential damages
- Gathering key evidence like medical records and witness statements.
- Talking to witnesses and experts to support your case.
- Handling all communications and negotiations with insurance companies and other lawyers.
Even under the best circumstances, trying to go through the legal process by yourself is overwhelming. That’s why our team at Maison Law strives to make the process as easy as possible for our clients.
Contact Maison Law After a California Accident
Whenever you’re hurt in an accident in California, there’s ways that the legal process can help you. That said, it can also be a long, confusing process. At Maison Law, we always want to help our clients by making the process as easy as possible. If you’ve been hurt in an accident and want to know what you can do to address your injuries, contact us today for a free consultation.
