At Ashby Thelen Lowry, our Georgia personal injury attorneys know that our clients want to learn everything possible about their claims, including their settlement amounts and whether they are taxable.
Please note that we are personal injury lawyers, not accountants or financial advisers. Therefore, it is important to speak with a tax representative to determine your exact financial liability.
With that said, in general, personal injury settlements in Georgia are not taxable at the state or federal level if they are related to physical injuries or illnesses. The Internal Revenue Service (IRS) considers compensation for these to be non-taxable.
However, there are circumstances when part of your settlement award may qualify as taxable.
When are Personal Injury Settlements Considered Taxable?
As mentioned, it is typically non-taxable if your settlement is awarded for damages related to physical injuries or illness, including medical expenses, pain and suffering, or lost wages due to injury.
However, punitive damages awarded in a personal injury settlement are generally taxable. Punitive damages punish the defendant for particularly egregious behavior rather than compensate the plaintiff for their losses.
In addition, any interest earned on a personal injury settlement, whether awarded by a court or negotiated as part of a settlement agreement, may be taxable as interest income.
If your settlement is structured to provide periodic payments over time rather than a lump sum, the tax treatment may vary depending on the specific terms of the settlement and applicable tax laws. It is highly recommended to consult with a tax advisor for guidance on the tax implications of structured settlements.
If you have been injured because of another person’s negligence in Georgia, contact our skilled personal injury lawyers and support team at Ashby Thelen Lowry today at (404) 777-7771 to schedule a free consultation. This will ensure your rights are protected so you can make informed decisions about the direction of your claim.