When you are recovering from an injury, the last thing you want to worry about is whether you’ll owe the IRS or the State of Oregon when you receive a settlement or court award. At Johnson and Taylor, our personal injury attorneys in Salem, Oregon help injured victims understand their rights and fight to help them get the justice and compensation they deserve. Here, we discuss whether personal injury settlements are taxable in Oregon and under federal law.
What the IRS Says About Tax on Personal Injury Settlements
The IRS has clear rules that outline whether personal injury settlements are taxable. Typically, compensation for physical injuries is not taxable on a federal level. This means that money you receive for damages like medical bills and pain and suffering are nontaxable. Money received specifically for lost wages may or may not be taxable. A tax expert should be consulted.
It’s also important to note that any interest earned on a personal injury settlement before it is paid is taxable by the IRS. For example, if your personal injury settlement or court award includes interest because payment was delayed by an insurer, that portion must be reported as income.
How Oregon Handles Tax on Personal Injury Settlements
The Oregon Department of Revenue typically follows IRS guidelines. This means that damages related to an injury are usually nontaxable, while interest on personal injury settlements are taxable in Oregon.
However, because federal and state tax laws can be complex, it’s vital to consult with our personal injury lawyers and tax professionals to fully understand the financial implications of a settlement before you accept it. We can help you maximize any compensation you receive and advise you on which portions may be taxable, if any.
Common Questions About Personal Injury Settlements and Taxes
Do I Have to Pay Taxes on Compensation for Medical Bills if I Already Deducted Them?
If you previously claimed a tax deduction for medical expenses related to your injury and were later reimbursed for them, you may have to report that portion of your personal injury settlement as taxable income. It’s best to consult a tax expert.
What About Lost Wages?
If lost wages are paid as part of a personal injury settlement in Oregon, they may be taxable. It’s best to consult a tax expert.
Are Attorney Fees Tax Deductible?
Legal costs are paid from any personal injury settlement or court award you receive, so you don’t need to worry about deducting them separately. Our personal injury lawyers take cases on contingency, which means you won’t pay attorneys’ fees unless you are compensated.
Why You Need an Experienced Oregon Personal Injury Lawyer
Taxes are only one part of the equation when it comes to personal injury settlements. Your personal injury attorney’s main concern is helping you obtain fair compensation for the full scope of your injuries and losses. Insurance companies are notorious for offering inadequate settlements and delaying and denying claims. Our Salem personal injury attorneys are well-versed in their tactics and won’t let them take advantage of you at this vulnerable time.
Our personal injury lawyers and accident attorneys are skilled negotiators. We settle most claims outside the courtroom, which saves our clients a lot of time, money, and headaches. However, if a reasonable settlement can’t be reached, we will take your case to trial. With decades of combined experience and a solid reputation in the Oregon legal community, we’ve handled a wide range of injury claims and wrongful death cases.
Personalized Service and Straightforward Legal Advice
One thing that sets our personal injury law firm apart is the attention and care we give to every client. We know that each case is unique, and we don’t make empty promises about exorbitant settlements. Our personal injury attorneys believe in setting honest, realistic expectations from the start. What we do promise is that our team will fight fiercely to help secure the compensation you need to heal and move on from this challenging time.
We offer free, no-obligation consultations for personal injury claims, even if you don’t move forward with your case. Regardless of your financial situation after an accident, our contingency fee structure levels the playing field and gives you access to quality legal representation with no up-front costs.
Our personal injury lawyers serve clients in Salem, Eugene, Bend, the Oregon Coast, Medford, and throughout the state of Oregon. In addition to litigating personal injury and wrongful death claims, our attorneys handle cases involving estate planning and probate statewide and divorce and family law in Marion, Linn, and Polk counties. We also provide top-notch legal services to our Spanish-speaking clients.
Contact Our Personal Injury Lawyers in Oregon
If you or a loved one has been injured due to someone else’s negligence, you don’t have to face it alone. Our team at Johnson and Taylor can advise you of your options, fight for your rights, and explain whether your personal injury settlement is taxable. To schedule a free consultation with a personal injury attorney near you in Oregon, contact us or call 503-990-6641 today.