Can the Government Tax My Wrongful Death Settlement?

A wrongful death claim is considered a civil wrong or a tort under New York laws, which may be remedied in civil court with monetary compensation. In other words, wrongful death claims are designed to compensate the decedent’s estate for the wrongful actions that caused the victim’s death.

 

The question that most wrongful death claimants ask is whether their settlement is taxable. The short answer is that personal injury and wrongful death settlements are tax-free, unless an exception applies.

 

Exceptions to the Tax-Free Rule

 

Some exceptions apply to the tax-free rule for personal injury and wrongful death settlements. They are explained below:

 

–          The portion of a personal injury or wrongful death settlement designated as compensation for loss of wages shall be taxable.

–          With regard to wrongful death claims specifically, an award for pain and suffering may be taxable to the decedent’s estate. However, depending on the specific facts of your case, your wrongful death attorney may be able to legally allocate the monetary compensation to the “wrongful death” cause of action to avoid taxation for the estate.

–          If you or the estate invested the personal injury or the wrongful death settlement proceeds in an investment that is taxable, the profit or gain on the settlement will be taxable.

 

With the help of an experienced wrongful death attorney, you may be able to structure your personal injury or wrongful death settlement insuch a wayas to avoid or at least minimize paying taxes on the amount that you receive.

 

Call Us

 

For more information or to schedule a complimentary consultation with a New York wrongful death attorney, please call call Gersowitz, Libo & Korek, P.C. at 800-529-9997.