Your family member died due to the negligence of another person or company, and you took them to court to recover some of the financial losses you have had. Now, you are wondering about whether you need to pay taxes on a wrongful death settlement. At Venerable Injury Law, our Los Angeles wrongful death lawyer can offer you hands-on guidance and support to help you evaluate your financial objectives in this matter.
You Are Not Likely to Have to Pay Taxes on Wrongful Death Settlements
Most of the time, if you receive a wrongful death settlement in California, you do not have to pay taxes on the funds you receive. This falls under the California laws related to wrongful death settlements. Keep in mind that we do recommend that you speak to your tax professional about specifics in your case since there may be times when some estates are taxable.
In some situations, your wrongful death settlement may be required to be taxed, specifically the portion awarded as punitive damages. These are specific damages that a judge may award to you in situations where there are very specific concerns, heinous outcomes, intentional acts, or other instances in which the judge believes you are owed additional funds. Punitive damages can be taxable income in California.
Keep in mind that many factors play a role in when and if you need to pay taxes on wrongful death claims. For this reason, we highly recommend that you seek our legal support and guidance before you use those funds or talk to your tax professional. Let us make sure you know what applies to your specific situation.
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Are Your Damages Compensatory?
Under federal law, the taxes on wrongful death settlements like this are considered a federal determination, meaning that the IRS oversees them. Under the IRS code, then, the amount of the damages you receive that are considered compensatory are not considered income to you, and therefore, you cannot be taxed on them. The IRS can determine that a portion of your settlement is not compensatory, and if that happens, they can claim that you owe taxes on those funds.
For clarity, then, you may be wondering if the damages you receive are compensatory. These are damages that are meant to compensate you (those awarded the damages in a wrongful death settlement) with compensation for either non-economic or economic losses. This means that the money you receive from claims such as medical bills, lost income, final funeral and burial costs, along with pain and suffering and loss of companionship, is not taxed.
However, punitive damages are not considered compensatory in that they are not meant to compensate you for the losses you have incurred, but rather as a type of punishment on the defendant for their conduct with the goal of deterring them from acting like this again. As a result, you will likely have to pay taxes on wrongful death settlement funds that are full under punitive damages. If you are not sure how that applies in your case, our attorneys can offer the clarity and support you need to ensure you know what to expect, and Venerable Law can help you.
Can You Get Punitive Damages in a Wrongful Death Case in California?
Typically, punitive damages are only available in situations in which a survival action is taken, which means that you are requesting that you receive funds as the survivor. The survival action is typically brought against the at-fault parties at the same time as your wrongful death lawsuit, and it is a step your attorneys can take for you to extend the protections available to you. If you feel you should be owed survival action funds, let our attorneys offer insight to you about what you can expect.
How Much Is Your Case Worth?
To determine how much your wrongful death case is worth, set up a consultation with our legal team. Let us go over what occurred and determine who is responsible. We can also factor in the dependence you have on this party and your right to receive compensation after their death.
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Make Sure You Pursue Maximum Compensation
While it is important to understand what to expect in terms of taxes after suffering the loss of your family member to wrongful death, it is also very important to focus on winning your case in the first place. Our goal, as your wrongful death attorneys, is to verify what happened, why, and what the impact was so that we can pursue maximum compensation in your situation. When you trust us with your case, we fight to protect you from any losses.
If you are considering filing a wrongful death claim, do not do so without the help and guidance of a skilled, specialized attorney with experience in this particular area of the law. It is complex to determine how much is owed as well as what types of financial awards you may qualify for, but our team can answer all of those questions. We recommend that you contact us first to learn more about your rights in your case.
We are happy to offer you a free consultation to discuss your wrongful death claims and circumstances with our highly experienced attorneys. While we can provide you with guidance on what to expect in relation to taxes, we will primarily focus on ensuring you are claiming all of the losses you have so that you can fight for fair and full compensation under the law. Having an experienced attorney by your side is paramount to this entire process.
Schedule a Consultation with Our Wrongful Death Attorneys in California Now
At Venerable Injury Law, our wrongful death attorneys have the experience and skill to help you achieve the best possible outcome in your case. We are honest, reliable, and willing to answer any of your questions, including whether you have to pay taxes on your particular wrongful death settlement. Contact us now to learn more about how we can help you.
We believe that our experience, dedication, and personalized approach set us apart from the rest.