Are Car Accident Insurance Settlements Taxable?
According to the Internal Revenue Services (IRS), whether a car accident insurance settlement is taxable depends on what types of compensation you received and who you sued to get it. Generally speaking, economic and non-economic damages are not taxable, but any interest you collected on the settlement is taxable.
What Are Economic and Non-Economic Damages?
When you file a lawsuit, you will have to list all the ways your accident has impacted your life, health, career, and so on. Each of these items will fall into one of two categories: economic damages (monetary) or non-economic damages (non-monetary).
To know for sure what types of compensation you pursue, you can speak to a car accident attorney. In the meantime, review the following questions. They will give you a good general idea of what you may be eligible for.
Examples of Economic Damages
- Loss of wages: Were you unable to go to work and/or perform your regular job duties for a limited period of time?
- Loss of employment: Did you have to take early retirement because you can no longer do your job? Are you unable to find employment in your chosen field?
- Repair bills: Did you pay someone to fix your car, or did you need to buy an entirely new vehicle because of the accident?
- Medical expenses: Did you have to go to a doctor or emergency room to treat your accident injuries? Will you need continuing care on a long-term basis?
Examples of Non-Economic Damages
- Pain and suffering: Were your accident injuries physically painful or inconvenient? Has your mental health suffered because of your injuries?
- Diminished quality of life: Do your injuries prevent you from living independently or from participating in activities you love?
- Disability: Have you lost the ability to use any part of your body the way you used to? Did you suffer brain damage?
- Disfigurement: Have your injuries left you with scars that cause you pain or that irrevocably alter your physical appearance?
Calculating Damages
Once you know what types of damages you are eligible for, you must assign a dollar value to each one. This can be challenging for many reasons, including:
- The emotional pain caused by remembering your accident and injuries
- The difficulty in assessing your own injuries objectively
- The lack of a “price tag” on non-economic damages, which do not have an established dollar value
- The difficulty of anticipating how much your injuries may cost in the future (e.g., the estimated cost of future medical treatment)
A lawyer who handles car accident cases can help you with all of the above. They can calculate your damages accurately and consult with professionals, such as medical professionals or accountants, who can provide insight into your injuries.
Can I Afford to Hire a Car Accident Lawyer?
Be sure to work out an acceptable fee agreement before you hire an attorney. Many law firms will agree to work for a contingency fee. This means they charge you no attorney’s fees unless and until they help you get your money.
In exchange for a contingency fee, your car accident lawyer will:
- Identify the liable party: Whether the liable party is a driver, a maintenance contractor, or someone else, your attorney can tell you who to sue.
- Assign a value to your case: Not sure what or how much to sue for? Let your attorney run the calculations for you.
- Negotiate on your behalf: Your lawyer will fight hard to make sure that the insurance company gives you the best possible settlement.
- Fill out all forms: Paperwork may seem like a “small” thing, but it is vitally important in a lawsuit. Your lawyer will ensure it is handled properly.
- Go to court for you: If the insurance company refuses to offer a fair settlement, your lawyer will be your advocate in the courtroom and seek to get fair compensation for you.
In addition to handling things at the negotiating table, your attorney will always make time for you. Call them whenever you have questions or concerns. It is their job to:
- Explain legal concepts that affect your case
- Advise you about your options
- Update you regularly about your case’s progress
- Help you make important decisions
How Much Time do I Have to File a Lawsuit After a Car Accident?
In Louisiana, you have two years to start a lawsuit after a personal injury, per CC 3493.1. Therefore, it is always better to contact a law firm as soon as you can. Your lawyer will need time to prepare a strong case that can support your request for compensation.
There is another benefit to filing a lawsuit quickly: more evidence will be available to prove your case. Evidence may include but is not limited to:
- Witness testimony
- Expert testimony
- Medical records
- Police reports
- Photos and video recordings
Reach Out to Our Attorneys Today for Help
If you would like help pursuing compensation after a car accident, call Laborde Earles Injury Lawyers at (337) 777-7777. We can help you figure out if your car accident insurance settlement is taxable, how much money you may be able to recover, and more.
