Maison Law’s California car accident lawyers can answer any question you have about the claims process. A common question many of our clients have is whether or not they have to report their settlement to the IRS. While tax implications may not be the first thing you think about when settling a car accident claim, they’re still important. Contact us today for a free consultation to talk about your options.
Do You Have to Report a Car Accident Settlement to the IRS?
Whenever you finally get a settlement after a car accident in California, it’s obviously pretty important to your recovery. Generally, it’s going to be a lump sum paid out to you based on how well you’ve presented your case and what your losses are.
But you only have to report certain parts of the settlement to the IRS. Generally, it boils down to the different kinds of damages:
- Physical injuries – Generally, damages related to physical injuries like medical expenses, pain and suffering, emotional distress, and loss of quality of life aren’t considered taxable income, so you don’t have to report them to the IRS.
- Income – Compensation related to things like repair or replacement costs for your car, lost income from missed work, or extra damages, do need to be reported because they are considered income.
While we’re here to help you secure a fair settlement, it’s always a good idea to consult an accountant for tax advice when your settlement comes in. This will make sure you meet all IRS reporting requirements and avoid any penalties.
How Can You Strengthen a Claim For Damages After a Car Accident?
Just having the ability to file an injury claim after an accident isn’t enough to actually get a good settlement. As a victim, you have to put forward the best possible case you can to show your damages and how the car accident has impacted you. This means taking steps to strengthen your claim right after the accident happens:
- Move to safety – First, get to a safe spot away from traffic and call 911 for medical help. Even if you feel fine, it’s crucial to have paramedics check for any hidden injuries.
- Work with the police – Ask the 911 dispatcher to alert law enforcement, like the California Highway Patrol (CHP) or local police, so they can come to the scene and manage it.
- Document the accident – If it’s safe to do so, take photos of the crash site, vehicle damage, injuries, and any other evidence like skid marks. Also, gather witness contact details for later statements that may support your case.
- Keep track of expenses – Track all medical visits, insurance interactions, and expenses. These records are key to proving your damages and ensuring a successful claim.
- Watch what you say – Be cautious when talking about the accident, especially with insurance reps. They might twist your statements to reduce your claim. Avoid discussing the accident on social media also.
Remember, it may be tough–or even impossible–to take some of these steps if you’re more seriously injured in the accident. However, taking these steps and gathering this information is what forms the foundation of your claim–and eventual settlement.
What is Included in a Car Accident Settlement?
At least legally, every car accident claim is the same. When there’s a car accident, the “negligent” person or group is the one that’s responsible for paying for the damages. Usually, this is the other driver when they rear-end you or weren’t paying attention when they caused the accident. Others can be involved, but once liability is established, you file an injury claim.
You can do this by either:
- Filing an insurance claim out of court
- Filing a personal injury lawsuit
Once your claim is filed, you’re attempting to recover “damages” from the person or group that’s responsible for the accident. This is what makes up your settlement, whether that comes in an offer before trial or a verdict in court. It includes things like:
- Medical costs
- Lost wages or future earning capacity
- Property repair or replacement
- Physical pain and suffering
- Mental anguish
- Reduced quality of life
- Punitive damages (for extreme negligence or intentional harm)
A key part of a claim in California is the statute of limitations. You must file your claim within two years of the accident to recover any damages.
How Can Maison Law Help You After a California Car Accident?
After a car accident, once the immediate steps are handled, it’s important to think about the legal process and whether you need a lawyer. This depends on how serious your injuries are and how complex your case is. Our team can help by:
- Explaining your options and the process
- Helping you put together evidence
- Guiding you through an insurance claim while negotiating for a fair settlement
- Helping you file a lawsuit, if necessary
Dealing with the legal side after a car accident can be stressful, but at Maison Law, we make it easier. If you’ve been injured in a car accident and want to know your options, contact us for a free consultation today.
