Tax Season & Your Personal Injury Settlement

Tax Season & Your Personal Injury Settlement

Many Americans were concerned during the 2019 tax season because it was the first year their returns would be affected by the Tax Cuts & Jobs Act (TCJA). Although President Trump signed this controversial reform bill back in 2017, most people were ill prepared for the inevitable confusion and depressing refund rates.  In the last few months, many of our current and former clients have expressed anxiety over how these new tax laws might affect their personal injury settlements and benefits.

The Good News

Fortunately, personal injury settlements and workers’ compensation benefits are a nontaxable form of restitution. A settlement, for the most part, is a judgment that reimburses you for any costs incurred as a result of your accident injuries. It’s technically not “new income” or a “gift,” so you can’t be taxed at a state or federal level. These damages are meant to cover your ongoing medical expenses, care costs, lost wages, and more. However, if you do receive compensation for lost income, you may have to pay income tax on that money. Likewise, while South Carolina does impose income taxes, Social Security benefits are 100% exempt from a resident’s tax liability.

Utilize Free Tax Assistance Programs

It’s important to contact a qualified tax attorney, CPA, or tax preparation service if you have any questions about your returns. Luckily, there are quite a few options available to you, especially in the early months of tax season.

One option, AARP Tax-Aide, was established in 1968 and serves approximately 2.6 million taxpayers each year. Although the AARP was primarily founded to help elderly citizens, Tax-Aide volunteers provide free tax assistance and educational resources to anyone, regardless of age or income.

Another option is the IRS’s Volunteer Tax Assistance program (VITA), which offers free tax assistance to:

  • People who make less than $54,000 a year
  • People with physical or cognitive disabilities
  • People who aren’t fluent in English

During your appointment, a VITA volunteer can review your tax documents, determine if you qualify for any tax credits, and help you file your tax return electronically and even.

Pursue Justice & Restitution Today

Contact Charleston personal injury attorneys at Pierce, Sloan, Wilson, Kennedy & Early, LLC if you’ve been injured by the actions of a negligent person, company, or government entity. Our compassionate legal team can investigate your case, negotiate with shrewd insurance company representatives, and even litigate on your behalf in court to secure a beneficial settlement or verdict.

Call Pierce, Sloan, Wilson, Kennedy & Early, LLC at (843) 968-0886  to schedule a free consultation today.

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