Tax Consequences for Mental Anguish in Personal Injury Litigation

Paying taxes often results in mental anguish, but when mental anguish is the reason for additional taxes, that is just too ironical for words.

The awards given in a personal injury lawsuit are in several categories. All personal injury cases sue for economic damages such as actual expenses for medical care, property damage, loss of income, or anything else that are measurable in financial terms. Some states limit personal injury awards to these damages, while others allow non-economic awards also known as punitive damages, typically imposed on the defendant as punishment for the wrongful act. These include pain and suffering, and mental anguish, although some impose a cap on the amounts. These are psychological components that usually accompany physical trauma, although even without physical trauma there can be mental anguish i.e. defamation.

When claiming for mental anguish, it is important to note that there is a tax consequence for mental anguish that is independent of or separate from physical injury. For example, if false statements affected an individual’s reputation that affected personal relationships on top of a decline in professional standing that had a financial consequence, the mental anguish from the loss of friendship or affection may be considered compensable. However, such compensation would be taxable under federal law.

However, if the mental anguish is tied in with a physical injury such as the loss of a limb, then it would not be taxable. Awards for physical injuries are generally tax-exempt, while mental injuries are not unless it is proven to be inextricable linked or inseparable to the physical harm sustained. When seeking to claim punitive damages for mental anguish or other mental injuries, it is important to insist to the lawyer that this be tied in with a physical injury if it is at all possible. An experienced personal injury lawyer would know how this can be done.

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Defining Criminal Assault

Most people believe that assault is actual physical harm inflicted on someone, but in general just the threat of harm can be considered criminal assault. It is one of the few criminal offenses for which a person can be charged with little or no evidence. By definition, anyone can state that they had been threatened with bodily harm, and this could be grounds for an arrest of the accused. Criminal assault can be a misdemeanor or felony depending on the circumstances of the incident. For example, simple assault such as swinging a bat but not making actual contact is a misdemeanor while aggravated assault, where actual physical harm occurs usually with a deadly weapon, is a felony.

State law dictates what constitutes criminal assault within its jurisdiction, so what may be criminal assault in one state may not be in another state. It is important when being accused of criminal assault that you retain a lawyer who has an in-depth knowledge of state law as well as an active practice in the jurisdiction. Criminal defense lawyers and state prosecutors in the same jurisdiction tend to know each other as well as other officers of the court, which can make your defense go more smoothly than if you bring in an outsider, no matter how experienced or knowledgeable.

The usual companion of assault is battery, which is the attempted or actual intentional or negligent infliction of bodily harm. In general, it follows that a charge of battery also includes assault, but a charge of assault does not necessarily include battery. Battery may also be classified as a misdemeanor or felony.

Because little evidence is required for a charge of assault, a conviction or dismissal boils down to how good the defense lawyer is in handling the case. It may not even get to a trial if the defense can provide a good reason for the case to be dismissed i.e. an alibi that proves the defendant could not possibly have been present at the time of the alleged incident to do the assault.

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