Is a Personal Injury Settlement Taxable, and How Can a Muncie Personal Injury Lawyer Help?

January 17, 2025

Accidental injuries occur frequently in Muncie, and they could stretch your wallet to the breaking point.  Fortunately, you may be eligible to seek financial damages when somebody else is at fault for your injury, and you could increase the amount that you obtain by hiring an attorney, though you may wonder about the advantages and disadvantages of taking legal action.  For instance, is a personal injury settlement taxable, and how can a Muncie personal injury lawyer help?  Join us as we discuss what a skilled legal practitioner can bring to the table after an accident. 

Personal Injury Compensation Is Generally Not Taxed 

It could cost you dearly when you are badly hurt in a collision with a car or truck, a construction accident, or a slip-and-fall, so it is important to maximize the value of any claim that you initiate against the defendants responsible for your injury. 

Since you probably want to hold on to as much of the money awarded to you as you can, you may be pleased to learn that personal injury settlements and verdicts in Indiana are generally not taxable.  As long as the funds in question are related to a physical injury or sickness, they shouldn’t be taxed at either the federal or state levels. 

Nevertheless, certain components of a personal injury compensation package might be taxable under some circumstances.  Among those taxable elements are punitive damages, which courts sometimes impose on especially reckless defendants in order to discourage similar misconduct in the future.  Because IRS regulations stipulate that “punitive damages are not excludable from gross income,” the portion of your personal injury settlement or verdict that is derived from punitive damages could be subject to taxes in the same way that your income would be. 

Economic damages for “mental and emotional distress arising from non-physical injuries” may also be potentially taxable, unless those damages are explicitly granted “on account of physical injury or sickness.”  Thus, if your mental and emotional injuries were the direct result of the accidental injuries that formed the basis of your Muncie personal injury claim, the funds associated with them might remain exempt from taxation. 

How a Muncie Personal Injury Attorney Can Make a Difference  

There may be additional exceptions with regards to taxation on personal injury claims, so it is critical to go over your legal rights and obligations with a knowledgeable Muncie personal injury attorney, without whom you might not be able to get the settlement or verdict that you deserve. 

This may be your first serious accident, but you can bet that it won’t be first for the defendants’ insurance companies, who will usually be your primary sources of fiscal recovery.  A veteran insurance adjuster could exploit your relative inexperience to resolve your personal injury claim for less or simply deny it altogether, which could leave you with little recourse when you may already be struggling to stay afloat. 

In contrast, a seasoned Muncie personal injury lawyer will be far better equipped to fend off the tricks and tactics that insurers often deploy against novice claimants, which is a big reason why injured victims receive 3.5 times more on average with attorneys than they do without them. 

Your lawyer will begin by identifying the causes of your accidental injury and all of the defendants who contributed to it, then move swiftly to establish valid claims and/or file suit against them and amass the materials needed to support your allegations. 

After assembling a rock-solid Muncie personal injury case, your attorney will work tirelessly to get you compensated for the totality of your losses.  When confronted with compelling evidence of both your damages and the insured’s guilt, a sensible adjuster may be convinced to tender a generous settlement rather than risk a worse outcome at trial, though a battle-tested lawyer will be indispensable if a trial cannot be avoided.  While plaintiffs who represent themselves in the courtroom only win about four percent of their cases, plaintiffs with professional representation are statistically favored to prevail. 

And if your attorney can make a receptive jury comprehend everything that the accidental injury took from you, its verdict might be substantial enough to allow you to get your life back on track. 

Our Muncie Personal Injury Lawyers Will Be Here for You 

Hopefully, you can now see the benefits of retaining quality legal assistance, the kind of assistance that Hoosiers have come to expect from Hensley Legal Group, which has been fiercely advocating for the wrongfully injured for over a quarter century.  If you are still reeling from the effects of an accidental injury in the Muncie area, our Muncie personal injury lawyers will be here for you. 

Just call us at (317) 472-3333, chat with us online, or fill out our contact form to schedule a free consultation with a dedicated Muncie personal injury attorney today.