After a personal injury, if it is serious enough, you may miss significant time from work, and perhaps even be unable to return to work. For many people, lost wages can be very difficult to bear financially. Especially if medical bills are piling up.
There may be several reasons that accident victims miss work after a personal injury incident. Immediately after an accident, injuries may prevent someone from working, especially if they need time to stay home and heal. People may also miss work, resulting in lost wages, because time is needed to go to medical appointments. Sometimes an accident victim may get a work restriction from their doctor if they can’t perform all their job requirements. As a result, they may miss work because they can physically handle only some work tasks, but not all.
Once lost wages are awarded to the injured, the next question may be, “Are the lost wages I received taxable?”
IS TAX ON LOST WAGES OWED TO THE IRS?
According to the IRS website, “If you receive a settlement for personal physical injuries or physical sickness and did not take an itemized deduction for medical expenses related to the injury or sickness in prior years, the full amount is non-taxable. Do not include the settlement proceeds in your income.”
As with any laws on taxes, there are always exceptions. Not every situation where lost wages are recovered is the same when it comes to taxes. Hiring an attorney will help you navigate your way through the confusing world of lost wages and what that means for you, financially.
The same IRS website also says, “If you receive a settlement for personal physical injuries or physical sickness, you must include in income that portion of the settlement that is for medical expenses you deducted in any prior year(s) to the extent the deduction(s) provided a tax benefit. If part of the proceeds is for medical expenses you paid in more than one year, you must allocate on a pro-rata basis the part of the proceeds for medical expenses to each of the years you paid medical expenses.”
Settlement and judgment award taxation can be complicated, depending on the extent of your injuries, type of lost wages, and many other details. You need a lawyer who has experience pursuing compensation for lost wages in Georgia. Contact the Fry | Goehring or call (404) 969-1284 today.