Maison Law helps answer questions about the legal process after motorcycle accidents. When you get a settlement after a motorcycle accident claim, it’s usually much needed to take care of your losses. While it’s a life-changing amount of money in some cases, there’s also potential tax implications. If you have questions about whether or not you need to report your settlement to the IRS, we can help. Contact us today for a free consultation.
Do You Have to Report a Motorcycle Accident Settlement to the IRS?
When you receive a settlement after a motorcycle accident, it’s crucial to look at how it impacts your recovery and finances. Settlements are typically paid as a lump sum, and it takes everything into account, from how well your case was made to the full extent of your losses.
However, only certain parts of the settlement need to be reported to the IRS. The key factor is the type of damages that you get:
- Physical injuries – Damages related to physical injuries, like your medical expenses, pain and suffering, emotional distress, and loss of quality of life, are generally not taxable. You don’t need to report them to the IRS.
- Economic damages – Any damages you get for lost income due to missed work, repair or replacement costs for your motorcycle, or additional punitive damages have to be reported because they are treated as “taxable income.”
Even though our number one priority is to get you a fair settlement that covers all your damages, you should make sure you talk to a tax professional or your accountant to make sure you meet the IRS’ reporting requirements.
How Do You Get a Settlement After a Motorcycle Accident?
In a motorcycle accident claim, the process is similar to other personal injury cases. The person at fault–usually another driver–is responsible for covering the damages if they were negligent. Once liability is established, you can file an injury claim by either:
- Filing an insurance claim out of court
- Filing a personal injury lawsuit
Your settlement aims to recover “damages” from the person responsible for the accident. This can include:
- Medical expenses
- Lost wages or future earning potential
- Repair or replacement costs for your motorcycle
- Physical pain and suffering
- Emotional distress
- Loss of quality of life
- Punitive damages (for intentional or reckless negligence–DUI, reckless driving, etc.)
While these damages are available once you file a claim, there’s still a deadline. In California, you have two years from the date of the accident to file. Miss this deadline, and you can’t get a settlement at all.
How Can You Increase Your Possible Settlement After a Motorcycle Accident?
Filing an injury claim after a motorcycle accident doesn’t guarantee a good settlement. To increase your chances of a fair outcome, you need to build a strong case that shows how the accident impacted you. Here’s what you can do immediately after the accident to help strengthen your claim:
- Get to safety – First, get to a safe spot away from traffic and call 911 for medical help. Even if you feel okay, it’s important to have paramedics check you for hidden injuries. If you’re seriously hurt, they’ll take you to a hospital.
- Call the police – Ask the 911 dispatcher to send law enforcement, like the California Highway Patrol (CHP) or local police, to manage the scene and get important insurance information from you and anyone else involved.
- Document the scene – If it’s safe, take photos of the crash site, damage to your motorcycle, injuries, and other evidence like skid marks. Also, gather contact information from witnesses for later statements.
- Keep track of your losses – Keep detailed records of all medical visits, insurance communications, and expenses. These are essential for proving your damages in your claim.
- Watch what you say – Be careful when discussing the accident, especially with insurance representatives. They might twist your words to reduce your claim. Also, don’t post about the accident on social media or anywhere else public.
If you’re seriously injured, it might be hard or impossible to take these steps after the accident. However, gathering this information is key to building your claim and securing a fair settlement.
How Maison Law Can Help After a Motorcycle Accident in California
After your motorcycle accident, once you’ve taken care of immediate concerns, it’s important to decide if you need a lawyer, especially if your injuries are serious. Our team of California motorcycle accident lawyers at Maison Law can help by:
- Explaining your options and rights
- Collecting evidence for your case
- Guiding you through the insurance claim process and negotiating a fair settlement
- Filing a lawsuit, if necessary
Dealing with the legal process can feel overwhelming, but we’re here to make it easier. We’ll also guide you through IRS reporting and other responsibilities that come with a settlement. Contact us for a free consultation to talk about your options after a motorcycle accident.
