Q: Is my Personal Injury Settlement Taxable?
A: As a general rule, personal injury settlements are not taxable to the injured party 26 U.S.C. 104 (A)(2). However, the IRS will treat that portion of proceeds received in consideration of an executed confidentiality agreement as taxable income.
Q: What is the difference between a claim and a lawsuit?
A: Most people confuse the terms claim and lawsuit. A claim is filed with the negligent party’s insurance company by the injured party to seek fair compensation for his or her injuries and losses. Filing a claim is an informal process that allows the victim to submit their claim with the insurer to pursue informal resolution. If the case cannot be properly resolved through the claim process, a lawsuit may be the next step. A lawsuit is a legal action taken by the victim against the negligent person, corporation, government entity, or insurance company in an effort to recover damages for injuries and losses. This action is a formal process that takes the case before the court and asks a jury to rule on the merits of the case. It is not uncommon for the party accused of negligence to seek to settle the case rather than take the issue to court.
Q: I was told personal injury attorneys work on a contingency fee basis. What does that mean?
A: That means we do not get paid unless you are paid. You pay nothing unless we secure a settlement or obtain a judgment on your behalf. If you would like to learn more about our firm and discuss our contingency fee agreement, please contact our office.