Is a Structured Settlement Considered Income?
If you are a plaintiff in a personal injury lawsuit, your eventual settlement may be paid in either a lump sum or a structured settlement. A structured settlement, as the term implies, simply means that your overall amount will be paid at periodic intervals, rather than all at once. If your settlement was $700,000, for instance, you may receive $70,000 each year for 10 years.
Is a structured settlement considered income for income tax purposes? It may depend on what the settlement award was for.
The Rules Vary According to What the Structured Settlement Is For
According to the Internal Revenue Service (IRS), certain proceeds received from personal injury settlements are exempt from income tax, but other proceeds may be subject to tax.
Usually, compensation for medical bills is part of any personal injury settlement. If your structured settlement is for medical bills to pay for injuries or illness and you did not take an itemized deduction for medical expenses related to these, the full amount is not taxable. Neither are expenses related to pain and suffering if they stemmed from your injury or illness.
Often, wages lost due to an injury or illness that caused you to miss work is part of a structured settlement. The tax treatment of this part of the settlement can be quite different. The IRS indicates that settlements for wages lost from work can be taxable.
As a result of these complications, it’s a good idea to consult a tax professional to make sure you are paying taxes according to the IRS’s rules.
Do You Need Help With Structured Settlement Funding?
Structured settlements can be advantageous to victims of personal injury, because income is coming in regularly, for a period of time. They can be particularly helpful to folks who have been out of work.
But the fact is, structured settlements may not fit every need. What if you have expenses that have built up over the years while you were waiting for your settlement to be finalized? Tax bills can be one of these! You also may owe a great deal in medical bills. What if you want to buy a house at last, or send your children to college? Once a structured settlement is divided by years and perhaps part of it taxed, it may not equal the money you need for these expenses.
There is a solution. You can get a cash advance on the money that will give you more than the structured settlement allows. It’s a simple application and you can be approved within 24 hours.
Best of all, there’s no risk. You’ve receiving a cash advance on money you are due to receive.
Let LawStreet Capital Help
LawStreet Capital is a leader in settlement funding. We offer options and flexibility to help you get the most out of your settlement.
Call LawStreet Capital representatives today to begin receiving more of your money now.