Maison Law can answer any question you might have about a car accident in Turlock. Most of your questions probably have to do with the process, but there’s certain things that come up even after you reach a settlement–usually involving taxes and the IRS. While we aren’t tax professionals, we can help you get the most out of your claim. Reach out to our team today to set up a free consultation to learn more.
Do I Have to Report My Car Accident Settlement to the IRS?
With a car accident claim, reaching a settlement is supposed to be a relief. You need money to pay for your medical bills, missed paychecks, car repairs, and other losses. This is what makes up the bulk of your settlement check, but it’s also natural to think about the tax implications anytime you get a lump sum payment. The answer–like a lot of things with a car accident–depends on the circumstances. Basically, some parts of your settlement are taxable and others aren’t. Here’s how the IRS generally covers it:
- Physical issues – For the parts of your settlement that are for physical injuries–like medical bills, pain and suffering, or emotional distress tied to physical injuries–you typically don’t have to report that. It’s not considered income, so the IRS usually leaves it alone.
- Lost wages and income – On the other hand, part of your settlement is going to help you with income you missed because you couldn’t work. That portion is taxable. Since wages would’ve been taxed normally, the IRS treats this as income.
- Car repairs – Another big part of your settlement is going to include car repair costs (or even a full replacement.) Fortunately, that’s not usually taxable–unless the payment exceeds your car’s value.
Both you and our team are going to do the hard work of getting you a fair settlement. That said, it’s a smart move to check in with your CPA or a tax professional before tax season hits. They can help you meet IRS requirements–and avoid a surprise bill later.
What Can You Do to Make Sure You Get the Best Settlement Possible?
Before you even think about taxes, the first goal is building a strong claim. The clearer your case is, the more likely you are to reach a solid settlement–-and the easier it is to report only what you have to. Here what you can focus on initially:
- Get to safety and call 911 – Whether you’re on West Main Street or heading down Canal Drive, your safety comes first. Even if you feel okay, get checked out by paramedics–you could have injuries that take time to show up.
- Call the police – Having the police at the scene can also make things easier. They’ll manage things and help you gather information from the other people involved. Ask the 911 dispatcher to send the local police, usually either the city police or the CHP.
- Take pictures and gather information – If you’re able, get pictures of your car, the other vehicle, the scene, and anything else that could help–like street signs or skid marks near the Monte Vista Crossings area. Get witness information too, if anyone saw the accident.
- Track all your expenses – This includes hospital bills from places like Emanuel, physical therapy visits, receipts for prescriptions, and even mileage for appointments.
- Be cautious when speaking about the accident – Especially when talking to police or insurance reps–what you say can be used to downplay your claim. And as tempting as it is, don’t post about the accident on social media.
If you’re seriously injured and can’t gather all this right away, that’s okay. Our team can help pull together what’s needed to support your claim–and help make sure your final settlement is documented in a way that’s easier to sort out at tax time.
What’s Actually Included in a Car Accident Settlement?
Every car accident claim in California is based on the same legal principle: the party responsible for the accident is responsible for covering the damage. Usually, that’s the other driver, but it could involve others depending on the circumstances. Regardless, the next step is actually filing a claim once fault is sorted out. You can do that by:
- Filing an insurance claim
- Filing a personal injury lawsuit
Once your claim is filed, it can move at different paces. Usually, there’s investigations, evidence gathering and finally, a settlement offer that’s based on your “damages” like:
- Medical bills
- Lost income or reduced future earnings
- Vehicle repairs or personal property damage
- Pain and suffering
- Mental or emotional distress
- Loss of enjoyment of life
- Punitive damages, in extreme cases
Again, some of these categories (like medical bills) are tax-free. Others (like lost wages or punitive damages) may need to be reported to the IRS That’s why it’s important to structure your claim clearly. When your lawyer separates each damage category, you’ll have a much easier time figuring out what to report when tax season rolls around.
And don’t forget–you only have two years from the date of your accident to file your claim. Miss that deadline, and you may lose your right to any settlement at all.
Get Help From Maison Law After a Turlock Car Accident
After a car accident in Turlock, there’s a lot to deal with–doctor’s visits, bills piling up, and trying to get a fair settlement. One thing people often forget to think about? Taxes. Knowing what part of your settlement might need to be reported to the IRS can make a real difference in what you end up keeping.
At Maison Law, we help Turlock accident victims not just file a claim–but understand every step, including how taxes might come into play. Here’s how we can help you:
- Walking you through the whole process, including what parts of your settlement may or may not be taxable.
- Building a strong claim by helping you compile medical records, pay stubs, bills, and anything else that supports your case.
- Handling talks with the insurance company that aims to get you a full and fair settlement that reflects your actual losses.
- Going to court, if it comes to that. From there, we’ll help you plan ahead for any tax issues that could come up once you receive your settlement.
If you’re recovering from a car accident here in Turlock and have questions about your claim or what to tell the IRS, you’re not alone. Reach out today for a free consultation and get the process started.
