Are Wrongful Death Settlements Taxable?
According to the Internal Revenue Service (IRS), wrongful death settlements are not taxable. Yet, there are some exceptions. For instance, if you receive punitive damages, that’s taxable.
If you have concerns about recovering damages after losing a loved one, you’re within your rights to consult a wrongful death lawyer. Laborde Earles Injury Lawyers offers compassionate legal help to those in your situation. During a free case review, we can answer your questions and explain what damages you can seek.
Wrongful Death Settlements Are Generally Not Taxable
The IRS understands that compensation for a wrongful death lawsuit should account for your economic and non-economic damages. Even taxing a small portion of this amount could end up costing you thousands. So, except for select instances, the IRS doesn’t ask for a cut.
The IRS may only tax a settlement if it accounted for:
- The decedent’s income. Had your loved one survived the accident, they would still pay taxes on their income. This does not change in the event of their passing.
- Emotional distress. The IRS reports that damages that result from “emotional distress, defamation and humiliation” are usually not taxable.
- Punitive damages. Punitive damages are designed to punish the defendant for their egregiously negligent actions. Because these damages don’t account for any particular loss, the IRS may not tax them.
Other factors could come into play when taxing your wrongful death settlement. A lawyer from our firm can evaluate your damages and explain how they affect your filing come tax season.
Understanding What Wrongful Death Damages You Can Recover
While determining what parts of your wrongful death settlement are taxable, it’s crucial that you understand what compensation accounts for. Through a wrongful death claim or lawsuit, you could recover costs associated with:
- The loss of the decedent’s household services
- The decedent’s funeral and burial expenses
- Loss of companionship, love, society, protection, support, and advice from the decedent
- The decedent’s emotional distress and mental anguish
- The decedent’s medical expenses before their death
Beneficiaries can recover compensation for both economic and non-economic damages. Because non-economic damages don’t come with receipts or price tags, they can be difficult to understand. That’s just another reason to consider entrusting your case to a wrongful death lawyer from our firm. We can identify your compensable losses and which ones are taxable.
Who Is Entitled to Compensation From a Wrongful Death Claim?
There are some laws and procedures outlining who can recover damages from a wrongful death case. Per CC Art. 2315.1, these parties include the decedent’s surviving:
- Spouse
- Children
- Parents
- Siblings
- Grandparents
It’s good to know that some parties have priority over others. For instance, the parents of the decedent can seek damages if they didn’t have a spouse or children. A lawyer can explain your eligibility to pursue legal action upon reviewing your case.
Eligible Parties Must Act Within the Statute of Limitations
To recover damages for a wrongful death, you must file your lawsuit within Louisiana’s statute of limitations. Acting outside of this deadline forfeits your right to damages.
It’s in your best interest to consider legal help as soon as possible. The statute of limitations isn’t the only time-sensitive aspect of your case.
How Our Wrongful Death Attorneys Can Resolve Your Case
When you lose a loved one due to someone else’s negligence or reckless conduct, holding them accountable is critical. Your family deserves this time to grieve rather than focus on complex legal matters.
When you partner with Laborde Earles Injury Lawyers, you can trust our team to:
- Investigate the cause of your loved one’s passing
- Identify all liable parties
- Consult with field experts to learn more about your case’s details
- File your insurance claim
- Submit your demand letter
- Calculate your damages
- Communicate with the involved parties
- Litigate your wrongful death lawsuit, if necessary
We also work on a contingency-fee basis. This means we offer help at no upfront or out-of-pocket cost to you. A portion of your final settlement accounts for our attorney’s fees, time, and efforts. This arrangement makes it so everyone can afford a lawyer, regardless of their financial circumstances.
We Keep You Updated on Your Case’s Progression
You’ll always know about your case’s status with us advocating for you. We remain in constant contact via phone calls, emails, and text messages. If we can’t get back to you right away, you can expect a response within 48 hours. We do everything possible to put your worries at ease during this challenging time.
Get Help From Our Wrongful Death Attorneys Today
While wrongful death settlements are not generally taxed by the IRS, some parts are. Your wrongful death lawyer at Laborde Earles Injury Lawyers can explain your obligations during a free review. During our conversation, we can discuss your claim’s details, loved one’s passing, and legal expectations. Call now to get started.
