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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Car Accidents and Personal Injury

Car accidents involving pedestrians are always a traumatic experience; a vehicle speeding at 30 miles per hour could result in serve injuries or even fatalities, and even at a significantly slower 10 miles per hour can already disable a pedestrian. For an injured pedestrian, the best way to make the driver responsible for their recklessness or negligence is to file a lawsuit.

In an event such as a car accident, the first thing to consider (especially to a pedestrian) is to determine who is at fault for the accident – was it the fault of the driver, or was the pedestrian the one negligent, or maybe both parties are at fault. This is an important factor in deciding whether a personal injury lawsuit or wrongful death can be pursued. A great majority of the states rule that the driver should at least have partial fault for the accident for a pedestrian to have a valid cause of a lawsuit.

According to the website of The Benton Law Firm of Fort Worth, anyone who has been injured due to negligence or recklessness has the right to file a lawsuit. The compensation given to the victim will not only pay for the medical expenses that the injury has caused, but it will also cover for the lost wages of the victim, their pain and suffering, and other damages that the victim and the court deem significant. These compensation awards are meant to make the victim whole again, or as physically healthy are possible.

The laws pertaining to personal injury claims, car accident insurance claims, and other legal matters can differ from state to state. It would be wise to consult a lawyer to help advice the next possible step in filing for a personal injury case. There are injury cases where the victim suffers only minor injuries, and these type of cases does not necessarily require legal representation, however there are cases where the victim suffers significant amount of injuries; this type of cases call for legal assistance.

Pedestrians are extremely vulnerable while they are sharing the road with motorists, and they are more likely to suffer from a more significant injury in a car accident. If you, as a pedestrian, suffered from serious injuries due to a negligent driver, you can learn more about pursuing an injury case. The recovery of compensation may depend on a number of factors (such as insurance policies, limitations, and exclusions) that may need proper legal assistance.

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