If you or a loved one has been hurt in an accident, it’s important to understand the financial implications of any personal injury settlement or award you may receive. At Johnson and Taylor, our team helps personal injury clients throughout the state of Oregon recover the compensation they need and deserve. If you’re wondering whether a personal injury settlement is considered income and subject to taxation, we can help you understand how the law may apply to your case.

Is a Personal Injury Settlement Taxable in Oregon?

Monies received in a personal injury settlement are intended to make an injured party whole and compensate them for losses such as medical expenses, lost wages, and pain and suffering. Because the federal government considers these damages compensatory, a personal injury settlement is not typically considered income and is therefore not typically subject to federal income tax.

Similarly, the state of Oregon does not typically consider a personal injury settlement taxable and compensation doesn’t need to be reported as income on a state tax return. However, there are some exceptions, depending on the types of damages you receive. Certain exceptions apply in wrongful death cases as well.

When is a Personal Injury Settlement Taxable in Oregon?

Certain types of damages in a personal injury settlement may be considered income in Oregon, including:

Punitive Damages

Although most compensatory damages received in a personal injury settlement aren’t taxable, punitive damages may be subject to taxation. Unlike compensatory damages such as pain and suffering, punitive damages are intended to punish an at-fault party for particularly egregious conduct rather than compensate the injured party for their losses. Under federal tax law, punitive damages are considered income and must be reported on the recipient’s federal income tax return. Typically, Oregon also treats punitive damages as income that must be reported on a state tax return.

It’s also important to note that depending on the specific circumstances, non-economic damages such as emotional distress may be taxable if they are the only type of damages received in a personal injury settlement.

Payment for Previously Deducted Medical Expenses

If accident-related medical expenses are deducted on a tax return and later paid in a personal injury settlement, the amount deducted is considered taxable income. Generally, this applies on both the federal and state levels.

Interest Income

In some cases, interest on damages in a personal injury settlement is taxable at both the federal and state levels. This means that any interest earned on a personal injury settlement is considered income and must be reported on tax returns.

Figuring out what may be taxable in a personal injury settlement can be confusing. Each situation is unique, so it’s important to consult with your personal injury lawyer and a financial professional such as an accountant to clarify your tax liability.

Types of Personal Injury Settlements

Lump Sum Settlements

A lump sum settlement is a one-time payment that encompasses all damages in a personal injury claim. If punitive damages are part of your settlement, they must be reported to the Internal Revenue Service (IRS) and the Oregon Department of Revenue. Additionally, if you decide to invest settlement funds, any interest earned from the investment may be taxable.

Structured Settlements

In a structured settlement, payments are spread out over a predetermined period of time or in a series of scheduled payments. Structured settlements can be beneficial in cases involving long-term medical care and other ongoing expenses. Generally, both the principal and earned interest in a structured settlement annuity are tax-exempt. Again, these issues are complex, and it’s best to consult with a personal injury attorney and tax professional to maximize the proceeds you receive from a settlement and minimize tax liability.

Does a Personal Injury Settlement Affect Child Support Payments in Oregon?

If you’re up to date on child support payments, generally, receiving a settlement won’t automatically increase the amount of child support you owe. However, Oregon takes the financial support of children very seriously, so if you’re in arrears or have a child support lien against you, your settlement can be garnished for outstanding payments. It’s also important to keep in mind that punitive damages and interest from a settlement can be considered income, and may affect your child support payments.

If you’ve been injured and you’re unable to pay child support while your case is pending, make sure to consult a family law attorney who can help you file for a child support modification to avoid being held in contempt of court. Our divorce and family and estate planning and probate lawyers serve clients in Marion, Polk, and Linn County and other surrounding communities.

Contact a Personal Injury Lawyer in Salem, Oregon

At Johnson and Taylor, we understand that figuring out the financial implications of a personal injury settlement can be stressful. We’re here to help you through the process and offer straightforward legal advice you can trust. Contact us or call 503-990-6641 to schedule a consultation with a personal injury attorney in Salem today. Our personal injury lawyers serve clients in Salem, Eugene, Bend, the Oregon Coast, Medford, and throughout the state of Oregon.

Whether you’ve been hurt in a car crash or slip and fall accident, timeliness is vital if you’re considering filing a personal injury claim. In Oregon, the statute of limitations on personal injury claims can significantly impact your case, so it’s important to understand how the law works. At Johnson and Taylor, our personal injury attorneys in Salem, OR give straightforward legal advice you can trust. We explain how the personal injury statute of limitations applies in Oregon and the ways in which it may affect claims.

What is a Statute of Limitations?

A statute of limitations is a law that outlines the maximum amount of time in which legal proceedings can be initiated after an event such as an accident or injury. Statutes of limitations can be applied in both civil and criminal law.

When a statute of limitations expires, a plaintiff loses the right to pursue legal action. For example, if you’re injured in an auto accident and don’t file a personal injury lawsuit within the statute of limitations in the jurisdiction where it occurred, you would be barred from suing any potentially liable parties for your damages.

How Long Do I Have to File a Personal Injury Claim in Oregon?

Oregon’s statute of limitations for personal injury lawsuits is typically two years from the date of the injury or discovery of the injury. However, there are limited exceptions to Oregon’s two-year statute of limitations for personal injury claims. For instance, if the injured party is a minor, the statute of limitations may be tolled (paused) and could be longer than the standard two years in some cases. Our personal injury lawyers are familiar with the statute of limitations exceptions in Oregon and can clarify how they may affect your potential claim.

Statutes of Limitations for Other Civil Claims

Each case is unique, and there are different statutes of limitations for other types of legal claims, such as those arising from property damage or wrongful death. In Oregon, the statute of limitations for bringing a wrongful death lawsuit is three years.

It’s also important to note that if you’re bringing a claim against a government agency or your case involves a dram shop claim, you’re required to give a claim notice before filing a lawsuit. In these cases, you may only have months to give notice. That’s why It’s vital to take action and contact our personal injury lawyers in Oregon as soon as possible after an accident.

What’s the Purpose of a Statute of Limitations?

The purpose of a statute of limitations is to promote fairness and efficiency in the legal system by bringing claims in a timely manner. This helps to ensure that evidence is readily available and memories are fresh in witnesses’ minds. Statutes of limitations also prevent indefinite legal liability and provide defendants with a degree of protection against dated claims.

How a Personal Injury Lawyer in Oregon Can Help

Depending on the circumstances, determining a personal injury statute of limitations in Oregon can be complicated. Our personal injury attorneys can assess your case and advise you on whether you have a viable claim and help you pursue compensation for damages if you decide to move forward.

Even if you’re unsure about whether too much time has passed to file a personal injury lawsuit, it’s worth speaking to our attorneys about your case. Our personal injury lawyers offer free consultations and take cases on contingency, which means you won’t pay attorney fees unless they help get you compensation. Our experienced accident lawyers will investigate your case, gather evidence, and identify all liable parties. The tactics that insurance companies use to delay or deny claims sometimes involve statutes of limitations. We’re familiar with their strategies and know how to counter any assertions they may make to deny your claim or minimize your injuries.

Our Personal Injury Attorneys Put Our Experience and Knowledge to Work for You

Some people believe hiring a large injury law firm that promises huge settlements is the best way to pursue a claim. However, finding an attorney who’s realistic about the possibilities for recovering compensation can save you time and money and provide the personalized legal representation you deserve. When discussing potential settlement amounts, our team tells you what you need to hear, not just what you want to hear.

Our injury attorneys help you understand your options and keep you informed about your case every step of the way. We’re committed to fighting for your rights and helping you recover the maximum compensation you need to protect your health and financial security.

We serve personal injury clients in Salem, Eugene, Bend, the Oregon Coast, Medford, and throughout the state of Oregon. In addition to handling personal injury claims, our attorneys litigate cases involving divorce and family law and estate planning and probate.

Contact our Personal Injury Lawyers in Salem, Oregon

At Johnson and Taylor, our dedicated team understands the importance of litigating personal injury claims within the statute of limitations in Oregon. If you or a loved one has been hurt in an accident, we’re here for you. Our experienced team includes Spanish-speaking attorneys and staff. To schedule a free case evaluation with our personal injury attorneys in Salem, OR contact us or call 503-990-6641.