When injured during a medical procedure, there can be lasting effects on your entire life afterward. From the quality of life to being unable to provide for your family, the devastating effects can make you feel lost and like you have nowhere to turn. It is your legal right to file a malpractice claim against the provider or facility if you have been injured due to negligence on behalf of a doctor, surgeon, nurse, anesthesiologist, or other medical professional.
By filing a medical malpractice claim, you can receive compensation for both financial and non-financial damages. To prove medical malpractice has occurred, you have to show that the hospital, doctors or other medical providers involved failed to give you proper care.
But you may be wondering, if your case is successful and you do receive a settlement, is that reward received from the settlement taxable? All you want is to have the responsible party be financially responsible for their damages, so do you have to owe any of that compensation reward in state or federal taxes?
The answer for this can be difficult, and really does depend on your unique situation. We have outlined the things you need to know about what portion of your damages are taxable and what may be exempt after receiving you compensation.
Receiving Compensation for a Medical Malpractice Claim
There are different kinds of damages that you can receive compensation from through a medical malpractice claim or lawsuit. Given the details of your specific case, you may be able to get financial relief in different ways:
- Current and future medical costs for your injuries
- Lost wages from any time missed at work during your recovery
- Loss of quality of life after sustaining life-altering disabilities and accidents
- Physical and mental pain and suffering
- Reduced future income if you cannot perform your job tasks due to your disability
Courts rarely will award punitive damages because the standards are more difficult to prove than it is for financial and non-financial damages. You can potentially be eligible to recover the punitive damages as a part of the lawsuit, but must be able to prove that the provider or facility that committed the malpractice was reckless and was done out of negligence.
What Parts Of Your Compensation Are Unable To Be Taxed?
If any of the money that you receive from lost wages is considered income, it is taxable under state and federal tax law. When being compensated through a medical malpractice settlement, the money you receive for those lost wages is considered to be income because they can be considered the same as wages you had received through your job.
Compensation that is recovered for financial damages is considered to be non-taxable income by state and federal tax policies. Financial relief for any injuries or illness that a person suffers from because of medical malpractice in New York cannot be taxed. You will not pay any state or federal taxes for reduced future earning potential, past and future medical costs or other losses related to your injuries.
What Can Be Taxed From Your Reward?
There are parts of a personal injury award that can be taxed. Punitive damages are subject to be taxed under federal law, and are not the same as compensatory damages because even though they are a portion of your total reward, the goal of the punitive damages is to punish the at-fault party for their negligence and it hopefully keeps them from continuously engaging in the same behavior and harming even more victims.
This is where having a medical malpractice attorney on your side can be extremely helpful so they are able to make sure your award is separated into punitive and comparative awards. This way, you are able to report only the amount of the punitive award to the IRS and avoid having to accidentally pay unnecessary taxes on your compensation reward.
Interest also may be taxable and start from the date when you originally filed the lawsuit.
Medical Malpractice Attorneys In New York
Considering there are so many complications that surround the law, it is highly recommended to speak with a medical malpractice attorney to help guide you through your claim. There is a two-and-a-half-year statute of limitations on medical malpractice cases in New York, and it will take time to have an attorney gather all of the evidence needed to build a strong case on your behalf and get you the compensation you deserve. Starting sooner than later allows you to take action in case anything falls through when arranging the settlement.
At the Law Offices of Steve Newman in New York, we have an extensive network of board-certified physicians to help analyze medical malpractice occurrences. We have familiarity with medical malpractice claims and can help you by investigating your case, documenting your losses, negotiations for your settlement, and minimizing the taxes on your reward.
We provide free phone consultations to identify your legal options and are here to protect you. Contact us today for a consultation.
