If you are a winner in lawsuit settlement, then you are an individual who will be asking on whether it is taxable. Remember, if you are such an individual, you have with you a lot of cash, and you are happy about it. After winning the settlement, individuals might find themselves paying tax to the government. After the winning of the cash, it is the wish of the government that they get some share as you were not charged in the trial for the civil case. Individuals Should be aware that there are two categories of a lawsuit settlement.
Physical injury settlement is usually regarded as the first category of the lawsuit settlement. Individuals should be aware that the second category is the settlement that is as a result of a non-physical injury. In case you encounter any the mentioned injuries, then bear in mind they are the categories of the lawsuit settlements.
Not only a broken bone will be considered as the physical injury, but also diseases such as cancer and flue. An example of a case that will be consider as being a non-physical injury is the defamation of character.Defamation of character is an example of a non-physical injury. With the defamation of character it is where the injury is as a result of emotional distress will is considered as being unquantifiable.
It should be noted that individuals need to be aware that there is a certain kind that will be either physical or non-physical. With this kind of case, it will be differently tacked. Punitive damage is the kind of settlement that we are talking about in this case. With the punitive damages, it is the instances where the defendant pay more than that required by a rule from the judge.
Punishing the defendant is the reason as to why this will happen. Individuals should have in mind that the money they are paid that will result to an increase in their income will be taxed. It should, however, be understood that with IRIS, they will have some exemptions if the claim is a physical injury settlement.
There will not be tax paid by an individual if the injury was a physical one. The case should only apply to the award settlement that is done on the replacement of the lost wages or even due to emotional distress.
Examples of the mentioned cases will include defamation, slider as well as the damaging of property. The taxes will be paid by an individual who will be regarded as a winner in this case. It is important for an individual who is in doubts on whether the kind of lawsuit settlement will have taxes to consult from a lawyer.