Kaufman & Stigger, PLLC helps people in Louisville when they’re hurt in a car accident. There’s a lot of questions that come up in this situation, both during and after the claims process wraps up. When you get a settlement, it’s natural to wonder if you have to report it on your taxes. While we aren’t tax professionals, we can make sure you get the most out of your claim. Contact us today for a free consultation.
Will I Have to Claim My Car Accident Settlement on My Taxes?
Most of the time, getting a settlement in a car accident claim is a huge relief–and financial boost. But there’s also practical matters that come with it, such as making sure your taxes are inline with the money you receive.
Generally speaking, only certain parts of your settlement–which comes to you in the form of damages–is going to have to be reported on your taxes. Usually, this involves:
- Lost income
- Car repair/replacement costs
- Punitive damages
While this can be problematic in certain cases, it’s important to realize that what makes up the bulk of your car accident settlement usually doesn’t have to be reported on your taxes, like:
- Medical expenses
- Pain and suffering
- Emotional distress
- Reduced quality of life
While our job is to help you get a fair settlement, we always recommend checking in with your accountant if you have questions about taxes. Some parts of your settlement might not be taxable, but it’s best to get guidance from a tax professional to avoid any surprises.
What Can I Do to Protect My Claim?
For as difficult as it is to be in a car accident, you have to try to keep a clear head at the scene so you can get the information you’re going to need for your claim. But it’s also important for protecting your claim and making sure you have a strong foundation. So, here’s a few steps to take to protect your claim:
- Call 911 right away – Once you’re out of harm’s way, contact emergency services so that paramedics and police can respond to the scene. Your health comes first, and the official documentation will help your claim later.
- Swap information with others – Exchange information with the other driver. Make sure to get their name, contact information, driver’s license number, and insurance details before you leave the scene.
- Document the accident – If it’s safe, use your phone to take pictures and videos of the cars, your injuries, road conditions, and anything else that tells the story of what happened.
- Hold on to everything – Keep medical records, receipts, damaged belongings, and any other documents that help show what you went through.
- Watch what you say – If you talk to police or insurance reps, stick to the facts. Don’t guess, speculate, or admit fault–it’s best to let the evidence do the talking.
Following these steps can go a long way in protecting your claim and helping you recover what you’re owed. If you need help with any part of the process, our team is ready to step in and guide you every step of the way.
What is the Process For Getting a Settlement in a Car Accident Claim?
In Kentucky, if someone causes a car accident, they (or their insurance company) are legally responsible for covering the damage. But to actually get “damages”, you have to file a claim by either filing:
- An insurance claim – Most cases are resolved by filing a claim with the at-fault driver’s insurance company and negotiating a fair payout.
- A lawsuit – If the insurance company won’t offer enough, you can file a personal injury lawsuit to let a judge or jury decide.
With a claim filed, though, you can get a settlement that’s built around your losses from the accident. This can include things like:
- Medical expenses, future medical needs, rehabilitation, and the cost of medication.
- Lost income from missed work or a loss of earning potential.
- Repair/replacement costs for your car and other damaged property, like phone or clothing.
- Costs relating to your physical pain, emotional distress, and mental anguish.
- Costs that relate to any reduced quality of life you go through.
In rare cases, if the other driver was extremely reckless or under the influence, the court may award extra damages to hold them accountable. Keep in mind: In Kentucky, you only have one year from the date of your accident to file a claim. That clock starts ticking right away–so the sooner you take action, the better your chances of recovering everything you’re going to need.
How Kaufman & Stigger Can Help After a Car Accident in Louisville
Once you’ve handled the basics after a car accident in Louisville, t’s normal to wonder if your settlement affects your taxes. While most car accident settlements aren’t taxable, some parts, like money for lost wages or punitive damages, might be. That’s why it’s a good idea to talk to a tax professional just to be safe. At Kaufman & Stigger, PLLC, we’ll take care of the legal side of things. We can:
- Explain what your settlement covers.
- Gather the documents you’ll need.
- Work with the insurance company so you’re not shortchanged.
- File a lawsuit if the offer isn’t fair.
You focus on getting better–we’ll handle the rest. If you’re unsure about your next step or how taxes might apply to your settlement, contact us today for a free consultation. We’re here to make things easier.
