Are wrongful death settlements taxable in Georgia? Wrongful death settlements in Georgia are not taxable because they are not considered income.
Our compassionate Duluth wrongful death lawyer can help you navigate the uncertainties of a claim.
Determine Who May File a Claim for Wrongful Death
If there are relatives, a spouse receives the first priority in making such decisions, and children or the parents and guardians can do so after that. The law is clear that only the personal representative of the person who died can file a claim for wrongful death on behalf of the estate if there are no living relatives. In this situation, the estate receives compensation from the claim when it is paid out.
The compensation from the claim in these situations must first pay any applicable liabilities, which may include taxes, as noted above. It may also include any liens on the settlement. Also note that legal fees, as well as medical fees associated with the party’s death and loss, may be paid before the estate receives the remaining funds.
Those funds are divided according to the terms of the will, if there is one, or based on the state’s rules. In situations where there are no living family members, the state may determine what to do with those funds. If you have the right to receive compensation because you were a dependent of a person who died due to wrongful death, seek out the resources of a Duluth personal injury lawyer to help you.
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The Taxability of Wrongful Death Settlements in Georgia
It is important that you understand your taxable obligations when receiving any type of settlement. The IRS does not consider wrongful death settlements or any type of settlement from a lawsuit taxable income under their tax implications of settlements and judgments report. The IRS taxes income, but it does not view these losses as income.
However, there are some situations where a component of the settlement could have tax implications, including:
- Punitive damages. In cases in which the court grants the victim’s family punitive damages, the IRS may reduce this amount as taxable income because it is not directly for the economic or noneconomic losses of the victim.
- Previous settlement payments. In some situations, you may receive less than the settlement amount if you received a portion of it at some point prior, such as through a loan.
- Changes. In some cases, the IRS may treat losses you received for emotional distress as income if it can determine that those losses were not related to sickness or personal injury.
Because of the complications of these types of cases, it is always beneficial to seek legal guidance from a wrongful death attorney to determine what your rights are and what financial obligations you may face. You can also speak to your tax professional to gain more insight into what these losses may mean for your taxable income going forward. In general, most people will receive these funds as non-taxable income.
Types of Compensation Paid in Wrongful Death Cases
The value of a wrongful death claim is dependent on the losses the filing party can show the at-fault party owes. There are various types of losses that the person who died may have suffered, as well as those who were dependents of that person during their lifetime. Some examples of the damages that may be paid in a claim like this include:
- Medical expenses from the injury that caused the death and throughout the care received prior to passing away.
- Funeral and burial costs, or cremation costs, are considered reasonable.
- Loss of companionship or consortium paid to the spouse or dependents.
- Loss of financial support if the person who died provided financial support to the household.
- Pain and suffering the individual experienced prior to their death after their accident.
- Emotional distress of family members who are facing recovery after their loved one’s death.
With the help of a wrongful death attorney, you can clarify more of the details about what losses you have the right to recover. There are many instances in which family members may not know what all of these losses are. Your Duluth car accident lawyer can help you determine what those rights are when it comes to wrongful death settlements and taxes in Georgia.
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Ensuring Your Settlement Is Fair
It is challenging to imagine any dollar amount of value being enough to be considered fair compensation for the losses you and your family have suffered. It is quite common for victims not to seek enough compensation simply because they do not know what they are owed. Yet, consider the implications of this in your future.
If your loved one was an income earner within the household, that income is no longer present. That could lead to implications with paying your rent or mortgage payments, maintaining your standard of living, and even covering things like childcare. If your family member was contributing to your retirement account with big expectations in the future, that income is no longer present.
With the guidance of an attorney, you can maximize your compensation to include all of your losses, which may help offset any settlement components that are taxable income. Not every situation results in the need to pay income tax on a wrongful death settlement, and many times, that does not happen, but by ensuring you are getting fair compensation, you reduce financial risk to yourself and your family for years to come. You deserve to be properly protected from the losses someone else tragically caused to you.
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Schedule a Free Consultation with a Wrongful Death Attorney in Georgia to Learn More
Victims of wrongful death cases deserve justice. Surviving families can hold parties accountable for the negligent death of their loved one and secure compensation to offset unexpected expenses.
Allow our legal team at Slam Dunk Attorney to guide you through this complex process by protecting your rights and explaining wrongful death settlements and taxes in Georgia.
Call or text 404-951-3513 or complete a Free Case Evaluation form
