The Financial Aspects of A Personal Injury Claim

The legal system allows for the filing of personal injury claims, so that victims of an accident can get back to where they were before that unfortunate event. Each claimant seeks a financial award. Yet there are multiple aspects to that award.

When it becomes necessary to look beyond the claim’s stated purpose

Once a claim has been filed, the opposing sides can try to settle by using negotiations. If that fails to result in an agreement, it may become necessary to move forward with a lawsuit. If the dispute gets settled in court, a judge announces a judgement.

The judgement states the size of the plaintiff’s/victim’s awarded compensation. The amount of money stated from the bench includes the interest on the award. The interest has been accumulating since the time when the claim first got filed.

The accumulation of interest does not stop with announcement of the judgement. It continues until the same judgement gets paid. The accumulated interest can be taxed.

Other times when some portion of the awarded compensation gets taxed:

When a victim gets compensated for the loss of wages, during the time that the victim was recovering from an injury, the reimbursement for wages can be taxed. The government makes a point of taxing each worker’s wages.

If the person filing the personal injury claim has stated that his or her emotional stress was the result of mental pressure, such as that created by a superior, then any award would be taxable. The adult with the complaint had not suffered any physical or mental injury. However, having a good personal injury lawyer in Camrose and Cochrane does help.

If an accident victim were awarded punitive damages, due to the egregious nature of the defendant’s actions, then the money received from those particular damages could be taxed. The plaintiff/victim did not need those damages in order to return to the position that he or she was in before the egregious incident.

Compensation that does not get taxed:

When a victim gets compensated for injuries, the money granted cannot be taxed. Those do not have to be physical injuries. They could be mental or psychological injuries. The money granted would provide the victim with a way to seek an effective treatment.

Not all victims claiming emotional stress state that their stress arose from the fact that someone had made them a target of mental pressure. Sometimes a victim that has suffered physical injuries can develop emotional stress. When that is the case, the money awarded to compensate for that injury-caused emotional stress cannot be taxed.

A client’s lawyer normally focuses on those issues that do not call for the awarding of a taxable amount of money. A lawyer seldom seeks especially large punitive damages, although a judge may award them.