Will my back injury lawsuit go to trial? If so, can I still get a settlement? How long will it take until I receive the settlement money? Is it taxable?


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Lawsuit Settlement Timing Taxes Injury Law

Will my back injury lawsuit go to trial? If so, can I still get a settlement? How long will it take until I receive the settlement money? Is it taxable?

Most personal injury lawsuits are settled by negotiation, without ever going to court. Settlements are usually negotiated between the lawyers for the insurance company and the injured person’s lawyer, with the injured person deciding whether or not to accept a settlement. A settlement typically pays you money in return for dismissing your claim. You can never know for sure that a lawsuit you bring will be settled, although it is likely.

It is difficult to predict at the beginning how long a case will go on prior to final settlement because there are so many factors. Generally, in less severe injury matters cases are resolved in approximately one year. In more serious and complex injury cases, sometimes it might take two or more years to settle.

For court awards and negotiated damages, to determine if settlement amounts you receive by compromise or judgment must be included as taxable income, it is best to consult with an attorney. As a general rule, compensation for personal physical injury or physical sickness, lost wages, or lost profits in cases where the payments are for wages lost as a result of physical injury are not taxed. Emotional distress is not considered a physical injury or physical sickness; therefore, damages for emotional distress are included as taxable income except to the extent they are paid for medical care attributable to emotional distress. Punitive damages (damages that represent “pay back” or punishment to defendants who engage in really bad conduct that causes damages or injuries to someone else) are taxable, even if they relate to a physical injury or a physical sickness.

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