Nothing can fully fill the void left by the passing of a loved one. If someone else causes the death of a close family member, it can be especially difficult for you emotionally. A wrongful death lawsuit is meant to provide some peace of mind and assist you financially. Wrongful death claims can help when your loved one’s passing leaves you with heavy medical debt and in a state where you are unable to support yourself. These settlements are often large, so plaintiffs want to know whether they will have to pay taxes on the money they receive, as a wrongful death lawyer, like from Hurwitz, Whitcher, & Molloy – Attorneys at Law, can explain. If you are involved in such a lawsuit, you should understand when the money will be taxed and when it won’t.
What You Can Claim
In a wrongful death lawsuit, your lawyer will examine your case and determine what damages you should claim and the amount of money you deserve. The incident that led to your loved one’s passing likely required extensive medical treatment. The costs of these treatments may fall to you as a surviving family member. You may be entitled to compensation to pay for your loved one’s hospital stays, surgeries, medication, medical equipment, and any other procedures related to the incident that caused his or her death. In addition, you should be able to collect money to pay for funeral and burial expenses. If you relied on this person as a means of financial support, your settlement should include payment for the money this individual didn’t earn because of his or her death, including future earnings. There will also be an emotional toll on your suffering, and your lawyer will help you claim damages for pain and suffering, loss of enjoyment and loss of companionship.
Anything you receive as compensation for your loved one’s death is not taxable. This would include payment to cover medical, funeral and burial costs. It would also include payment to cover your family member’s loss of earnings. Because someone else was found responsible for the person’s passing, your compensatory damages carry no obligation for you to pay taxes on the settlement.
Conversely, if you receive any punitive damages settlement money, you will have to pay taxes on those. This settlement is designed to punish the offending party. This money is considered as income, and you must report it on your taxes when you file.
If you have any questions regarding your settlement, talk to your attorney. It should give you clarity and closure to know whether you must or must not pay taxes in these situations.