How are taxes determined for the punitive amount of a personal injury award?

The economic and non-economic damages a victim received in a personal injury award are not taxable, however, if punitive damages are awarded, those are taxable under the federal tax code. However, before the tax is determined on that amount, the victim is allowed to deduct the attorney’s fees related to that punitive damage amount first. In the majority of personal injury cases, attorneys work on a contingency basis, meaning they don’t get paid unless they are successful in getting financial compensation for the victim. Typically, the fee is one-third of the amount the victim is awarded.



·       Future Damages in a Personal Injury Case: Part I

·       Future Damages in a Personal Injury Case: Part II

·       Income Taxes and Truck Accident Awards

Eric K. Washburn
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Personal Injury & Wrongful Death Lawyer Serving Va Beach, Norfolk, Chesapeake & all of Virginia