Taxability of Asbestos Lawsuit Settlements

Most mesothelioma lawsuits are settled instead of settling through a trial. This is due to the fact that trials are expensive and at fault companies prefer to avoid them when they can.

Compensation for asbestos victims is tax-free under federal law. However, there are certain aspects of a mesothelioma lawsuit or verdict that could be considered tax-deductible income.

Punitive Damages

If you or a loved one has been exposed to asbestos you could be able to bring an action against the company responsible for your injuries. A successful lawsuit could result in financial compensation for medical expenses, lost income and other damages. The amount you receive will depend on the severity of your illness, injury and other factors. Taxation is generally not applicable to compensatory damages, but punitive damages may be. It is recommended to consult a tax professional to determine the amount of your settlement is tax deductible and how to report it correctly.

Settlements for mesothelioma are usually conducted in private between lawyers representing victims and asbestos companies that were responsible for the victim's exposure. These negotiations are built around the emotional and physical pain of the victim. The aim of this process is to secure the maximum possible settlement for their client. Asbestos lawsuits are based on the evidence of negligence from asbestos-producing companies and a seasoned lawyer is the best person to assist victims receive the most compensation available.

Compensation received through an asbestos settlement or verdict isn't tax-deductible under federal law so in the event that it directly relates to a person's physical injuries or death. This includes compensation for lost wages, medical expenses and attorney's fee. A portion of the award is considered punitive, however it is tax deductible. This is due to the fact that it is designed to punish asbestos firms.

Depending on the amount of the award, it could also affect the person's eligibility for government benefits. Certain programs, like Social Security Disability Insurance, have strict income limits. If an asbestos settlement pushes the victim over the limits of their income they could be denied access to crucial financial aid. However, by speaking with a mesothelioma attorney about the taxability of their compensation, a victim can be better equipped to manage their finances and ensure they receive the compensation they deserve.

Profit and lost wages

Compensation may be available for asbestos victims who are unable to work due to the seriousness of their illness. Depending on the specifics of their case, they could receive awards for lost wages and profits. To ensure that they do not have to pay tax on these awards it is recommended that they consult an attorney for mesothelioma. An experienced attorney can aid victims in understanding what portions of their settlements will be taxed. They can also make sure that the victims are taking full advantage of the tax deductions they are entitled to.