They say nothing in life is certain except death and taxes. This statement is true, even when you win a personal injury settlement. While your personal injury settlement in Illinois is an award, there are still parts of your settlement that the government can tax. Knowing which parts of your award will be taxed can save you frustration when you have to pay this money at tax time.
Discussing your case with a Chicago personal injury lawyer from Lane & Lane, LLC can help you calculate the value of your claim. We’ll consider taxes when assessing how much money you should fight for.
Although most of the settlement you win in Chicago will be tax-free, there are some exceptions. If you win compensation for medical expenses in your claim, this award will be tax-free unless you itemized a deduction for these expenses on previous tax returns. If you won compensation for lost wages, you must pay federal taxes for these wages.
Regarding awards for property damage, you won’t have to pay taxes unless you’re awarded more money than the property is worth. If you are, then you must pay taxes on the excess money you’re awarded.
If you win punitive damages in your case, the government will tax this award. Also, if you’re awarded interest in your lawsuit, then the interest will be taxed.
If you’re confused about how your personal injury claim will get taxed, you should discuss your situation with a Chicago personal injury lawyer from Lane & Lane, LLC. If we work together, we can handle your case from start to finish and make sure you comply with the tax laws. If you’d like to schedule a free consultation with our team, call 312-332-1400 or fill out the contact form below.