Receiving an injury because of another person’s negligence can leave you reeling in the aftermath. Both the injury itself and the issues that can arise in your life such as unexpected medical bills, lost income, and in some cases, long lasting physical damage from the injury you received.
But following an injury caused by another person’s negligence, you can seek to file a personal injury claim. Should your personal injury claim be successful, you will receive a personal injury settlement. This settlement is an agreed upon amount of financial compensation that the liable party (or their insurance company) will pay out to the injured individual.
The financial compensation received from personal injury settlements in Ohio will typically cover damages such as medical expenses, lost income, and pain and suffering, among others.
But once you receive your personal injury settlement, there are a number of questions you might still have. A big one is whether or not you have to pay taxes on a personal injury settlement. Below, we are going to answer this question for personal injury settlements in Ohio.
Disclaimer: The following is not intended as legal advice. It is general information meant to educate. Please consult with a personal injury lawyer for legal advice and guidance on your case.
Do You Pay Taxes on Personal Injury Settlements in Ohio?
The long and short answer to this question is no, personal injury settlements in Ohio are not taxable.
According to the Internal Revenue Service, the IRS does tax your gross income. But as per IRC Section 104, gross income does not include damages that are received “on account of personal physical injuries and physical injuries.” So, a personal injury settlement is exempt from taxation in Ohio.
Are There Execptions to This Rule?
In some cases, there may be exceptions to this rule. This will largely depend on whether or not you have been awarded punitive damages in your personal injury settlement.
Punitive damages are damages that are intended to punish the individual or parties responsible for the negligent actions or behavior that led to your injuries. Punitive damages are awarded separately from other damages in a personal injury settlement and are typically awarded by the court or a judge.
If you are awarded punitive damages, you will have to pay taxes on the money you receive. It can be helpful to ask your personal injury lawyer to see if the judge can separate any awarded punitive damages from other damages you receive.
There may be other taxable exceptions in regard to damages awarded in personal injury settlements in Ohio as well, such as damages for emotional distress or pain and suffering, as neither of these are physical injuries.
How Can I Address Individual Concerns About My Personal Injury Settlement’s Taxation?
Overall, understanding how each individual type of damage received from a personal injury settlement may be taxed can be a complex undertaking. What may be taxable or may not be taxable can also be impacted by the time of year in which you receive your settlement, how you paid for your medical expenses before receiving your settlement, and more.
We highly recommend reaching out to your personal injury lawyer. They will be able to take the details of your case and your settlement and help you further understand how exactly your personal injury settlement may be taxed.
About the Author
Heit Law, LLC is a law firm based in Columbus, Ohio that specializes in personal injury cases. The firm’s founder, Corey Heit, has represented thousands of clients in a variety of different cases including catastrophic injuries, car accidents, slip and fall cases, and personal injury settlements in Ohio. To each personal injury settlement case that he takes on, Corey Heit brings an experienced approach and dedicated focus to the table. He provides each client with proactive and effective representation as he works to resolve personal injury settlements in Ohio. You can connect with Heti Law online or over the phone to schedule a consultation.