The damages awarded to individuals harmed as a result of medical malpractice are very helpful when it comes to affording medical expenses and dealing with lost wages. There are other damages such as non-economic and punitive.
While these awards are great, not many people are sure of whether or not they are taxable and what this means. Does it become part of income? Can you lose some of the money awarded? These are important things to know.
So, are medical malpractice awards taxable? It depends.
There are certain circumstances that must be considered and they determine whether or not you have to pay taxes on your award. Here are the things you should know about which damages may be considered taxable and which ones are tax-free.
- Economic damages: These are the damages with direct monetary value that compensate you for the medical expenses associated with the injury sustained. These damages are not taxable income.
- Non-economic damages: For emotional damages, the award is taxable unless it is directly connected to the physical injury or illness.
- Punitive damages: These are considered additional awards that punish the defendant and because it’s on top of any compensation, it is considered taxable income.
If economic damages include replacement income, that must be included in the taxable income, as well as interest awarded as part of the lawsuit.
Regardless of whether or not the award is taxable, you deserve the right to seek compensation for the damages caused by a negligent medical professional. You should be able to hold the responsible party accountable financially.
Our Philadelphia medical malpractice attorneys at The Beasley Firm are committed to protecting your rights and we know how difficult this situation is. You deserve to seek compensation and if successful, you should know what is taxable and what is not.
We make it a point to explain your rights and options every step of the way so you have the peace of mind you deserve. Trust that we’re here for you.
Call us today at (215) 866-2424 to discuss your potential case.