If you make it through what can sometimes become a long and challenging legal process and are finally set to receive much-needed compensation for your medical malpractice case, you'll likely feel elated and relieved when the settlement funds finally arrive. But before you run out and spend it all to pay accumulated bills or other expenses, it's important to realize that a portion of your settlement may belong to Uncle Sam. Talking to an experienced personal injury attorney can help clarify your obligations to the IRS.
What is and is not taxable in medical malpractice lawsuit settlements depends on what, specifically, the funds have been designated to pay for. In general, the portion of a settlement designed to compensate you for what you already spent for medical care for physical injuries is not taxable. Other elements of a settlement are, however, taxable, including:
In other words, any portion of your settlement that could be considered to be income that is not directly related to medical expense reimbursement is probably taxable.
Settlement funds that are designated for physical injuries and certain treatments for emotional distress are not considered to be taxable. Funds designated as compensation for pain and suffering arising from emotional distress, however, are taxable. If you've already deducted medical expenses for a given year on a previous tax return, however, those medical expenses are taxable.
At Rosenberg, Minc, Falkoff & Wolff, LLP, our lawyers can provide perspective about the likely tax implications of a potential settlement. Each case is different, and so it is important to get information specific to your situation. For a free initial evaluation of your case, call our New York office at 212-863-9101 local or 212-344-1000 toll free, or submit information to our online form to tell us more about your situation.
Where do I start… As a client of a malpractice case, I did not know what to expect. However, the support from Rosenberg, Minc, Falkoff & Wolff Law firm made me feel at ease. The dedication, compassion, and overwhelming hard work that Gary Silverstein put in was undeniably AMAZING. Seeing how hard and diligent Gary worked on my case made me realize that I had the best team on my side. The support from the entire legal team was unbelievable. There were continuous updates, follow-ups, most importantly assurance of any concerns I had before and during my trial. In fact, during the trial Gary showed a vast form of knowledge, strategic and responsive thinking, and most importantly wisdom. His dedication was unbelievable, and not one time did I not feel involved. I am truly appreciative for all that Rosenberg, Minc, Falkoff & Wolff Law have done, but mostly I am appreciative of the amazing staff they have. Lorraine and Sharon played a big part in my case, and I am truly thankful for their support and hard work. I am truly happy to have been a client of Rosenberg, Minc, Falkoff & Wolff Law. I highly recommend them and will continuously refer them, Thank you RMFW!
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