Are Wrongful Death Settlements Taxable?
Generally, wrongful death settlements are not taxable. The IRS usually views these in the same way as settlements for personal injuries or illnesses and does not tax them. If you are thinking about filing a wrongful death claim, seek legal help.
A wrongful death lawyer in Richmond can evaluate your case in detail. They understand how emotionally draining it can be to go through the legal process after a loved one dies due to no fault of their own. Your attorney will prioritize your best interests and do everything they can to help you secure a fair settlement.
Are Wrongful Death Settlements Taxable in Virginia?
In Virginia, most wrongful death settlements are not taxable. This is because the IRS may consider a wrongful death settlement as a personal injury claim, which is not taxable. Wrongful death case damages that are classified as non-taxable include:
Lost Income
Your family member was the primary source of income for you and your loved ones. If this individual passes, you and your family members could struggle to stay afloat financially. You can request compensation for lost wages in your wrongful death case, and your attorney can use pay stubs and other proof to show a judge or jury that you should be awarded damages.
Medical Bills
Ultimately, you and your family did everything possible to provide your loved one with medical care until their death. You may have outstanding bills for this care. In this instance, you could recover damages for these bills via a wrongful death claim.
Burial and Funeral Expenses
You honor your late family member with a burial and funeral. In your wrongful death case, you can pursue damages for burial and funeral costs. Your attorney can review these expenses carefully and prepare an argument to show that you should receive compensation for them.
When you work with a lawyer, you are well-positioned to get a wrongful death claim settlement that provides adequate compensation. Your attorney can teach you about the average wrongful death settlement. They may encourage you to reach out to a tax professional for further details about a settlement’s tax implications.
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What Parts of a Wrongful Death Settlement Can Be Taxed in Virginia?
There are times when punitive damages awarded in a wrongful death case can be taxed. These damages are provided to deter a liable party from committing future acts of negligence. They are rarely offered in personal injury cases.
In addition, compensation provided for emotional distress unrelated to a physical injury, previously deducted medical expenses, and interest earned on a settlement may be subject to tax implications. To learn more about these, consult with a lawyer. They can explain who can file a wrongful death lawsuit in Virginia and how to maximize your settlement.
There are many ways that lawyers calculate personal injury settlements. Your attorney can review the facts of your case and determine your losses. From here, they can prepare an argument designed to prove you deserve damages and negotiate a settlement on your behalf.
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What Will Happen If You Do Not Notify the IRS About Your Wrongful Death Settlement?
If your settlement is non-taxable, keep the money you received and use it as you deem fit. You do not have to notify the IRS about the settlement. On top of that, you will not incur any penalties based on your actions.
In a situation where certain portions of your settlement are taxable, you can be punished if you do not report them to the IRS. You could incur fines and other penalties. As such, it can be beneficial to have a tax professional assess your settlement and help you submit any required documentation to the IRS relating to it as needed.
There is not much you can do if you are unhappy with a settlement. Alternatively, your lawyer can account for the tax implications of a settlement as you go through the legal process. They could structure your settlement in a way that allows you to limit your tax liability.
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How Do I Get a Wrongful Death Settlement?
Work with a lawyer who will prioritize your case. Choose an attorney who is empathetic and compassionate, as they can guide you and your family through the legal process. Your lawyer can focus on your case while you and your loved ones take care of one another during this challenging time in your lives.
Your lawyer can provide insights into the tax implications of settlements and judgments. They will work diligently to prove you deserve reasonable compensation. Your attorney can also dispute the defendant’s claims.
Just because you receive a settlement offer does not mean you are required to approve it. If your lawyer negotiates a settlement but the defendant chooses not to offer sufficient compensation, you can decline the offer. At this point, your lawyer could help bring your case to trial.
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Partner with Wrongful Death Lawyers Who Will Advocate and Fight for You and Your Family
Negotiating a wrongful death case settlement can be overwhelming. If you make a mistake, you risk accepting a settlement that could force you to pay steep taxes. Fortunately, a wrongful death attorney can help you avoid this and similar errors during your legal proceedings.
The Pendleton Law Team has successfully handled thousands of cases across central Virginia. Our lawyers are available to assist you with your wrongful death case. Contact us to get started.
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