Individuals who have taken part in and won a mesothelioma lawsuit need to understand how the tax laws will affect the amount of money they actually received during the payout process. Several factors determine what amount is taxed and how much will eventually be turned back over to the government.
What Type of Injuries Are Exempt
Physical injuries or illnesses that are directly related to the workplace are exempt from taxation to an extent. Broken bones, mesothelioma, deep wounds, etc., will all qualify for tax-exempt status. Mental or emotional trauma, on the other hand, is not exempt and awards are taxed to a certain percentage.
Who Is At Fault?
Taxation is also dependent on who is at fault when it comes to the injury or illness. If you received an injury or got an illness because you didn't follow safety protocols, then your award could be taxed. On the other hand, if your company was negligent in providing you and other employees with the required safety tools or had knowledge of a defective machine that eventually resulted in your injuries, your payout would not be taxed.
Punitive damages are paid over and above the coverage of your medical needs. Sometimes referred to as “pain and suffering” damages, they are awarded according to how much your life has changed due to being injured. These damages are taxable according to the IRS. The percentage that is taken will depend on what portion of your total payout is deemed to be punitive.
If you receive a large payout in a mesothelioma lawsuit, it's in your best interest to discuss how much of your earnings are taxable. It's important to have these answers so that you don't overspend or take away money that will be needed for your healthcare in the future.