Taxes and Legal Matters
So it is tax day again. Those who receive a refund likely filed way before today. It is the people who have to pay who wait to the last day. Many people file extensions as well.
With all the talk of budgets, raising taxes, cutting expenditures, it is important to know what is taxable and what is not regarding legal matters. I am not a tax attorney, but some benefits or damages are taxable and some are not.
Damages recovered from personal injury cases are generally not taxable. There are of course exceptions as usually in the law. Punitive damages are taxable. See IRS publications for specifics.
In regards to Social Security disability benefits, “you will have to pay Federal taxes on your Social Security benefits if you file a Federal tax return as an individual and your total income is more than $25,000. If you file a joint return, you will have to pay taxes if you and your spouse have a total income of more than $32,000.”