When you make a personal injury claim what you will be doing here is to seek compensation against the liability party. In most cases this will be against the insurance company which is representing the liability party. Something which not a lot people recognize when it comes to filing this kind of claim, is that the large majority of them end with an out of court settlement. You could represent yourself in this kind of case but it is far better to use the services of a high quality operation such as injury lawyers Philips Law Group.
Before you file any claims, here is what you should know about compensation.
What To Know About Settlements
As we have just mentioned, the overwhelming majority of these cases will be settled before they even get to the courtroom. The main reason for this is that in most cases it is in everyone’s best interests. Both legal teams can avoid a lengthy and potentially pricy and time consuming court case if they settle, and most clients are more than happy to accept a lump sum payment and get it over and done with. Oddly enough most compensation figures at settlement are significantly lower than they could be if the case was won in court, but there are so many more benefits to the client if they settle. Above all, any court case will incur more legal fees which will be sliced off the eventual compensation even if it is higher.
What Is Compensation Designed For?
The idea behind compensation is to put the victim in the same or in a similar position to what they were in before the injury occurred. Naturally this is never totally possible, but the money should ensure that nobody faces financial hardship as a result of the injury and that they are reimbursed in some way for what has happened to them.
What Can You Spend Compensation On?
There are absolutely no rules or requirements as to what you should do with the compensation when you receive it. This money is yours and once the legal team have taken their pre-agreed percentage, the cash will go straight to you without any form of limitations. Spending the money which you have received, despite the intentions for awarding it, is completely up to you.
Is Compensation Taxable?
As you can probably imagine the IRS doesn’t make the subject of paying tax on any settlement or judgement amount very easy. What should, be noted here is that in most cases, you will not have to pay federal tax on the compensation which is awarded. The reason behind this is that they take the view that the compensation is awarded in order to cover costs which have been or which may be incurred. The stance of the IRS is that the victim of the injury will have already paid tax on those costs, medical bills, transport, care etc. and therefore they will not be subjected to taxation again. Your lawyer will be able to help you to decipher the rules behind what the IRS says and offer you some support as to what you should declare and how, in order to be crystal clear with the government.
Any further questions which you may have about compensation, don’t hesitate to ask in the comments section below this post.