More About Taxes And Insurance Settlements
Since you are reading this, you must either be currently undergoing the fight for fair settlement in the aftermath of a car accident, or you are forward thinking and curious. Regardless, you are seeking answers to the question: Is settlement money taxable?
Settlement Money from the ICBC Is Not Taxable
This will most likely come as a relief. The Insurance Corporation of British Columbia, better known as the ICBC, is responsible for universal car insurance, vehicle registration, and other motor vehicle connected bureaucracy, as well as the overseeing of car accident in British Columbia.
Because of this, you will be required to report any and all car accidents you were involved in to the ICBC within twenty-four hours. Following this, a claims adjuster will reach out to you and ask for a detailed description, basic driver information, and maybe also a signed statement. Throughout this process, you will want to be in contact with a lawyer who will guide you and ensure you aren't damaging your chances of getting your claim through to the settlement stage.However, even during the settlement stage, the claims adjuster will still do their best to minimize monetary compensation in order to save the company money. That is one of the key reasons to hire an injury lawyer in Kelowna as they will protect your rights and ensure you are properly compensated.
Is A Won Lawsuit Taxable?
When it comes to the compensation won in a lawsuit, things are not as black and white. While the final payout will not be taxed, the percentage that comes from lost wages will be. This is because, if the wages had been regularly earned, the injured would have also paid regular taxes.
Aside from this, there are very few cases in which settlement money may be argued to require taxes. To further calm your mind or get more details about these cases, you will want to reach out to a lawyer. Free consultation sessions are most often offered and should be taken advantage of.
Why Lawsuit Settlements Are Not Taxed In Most Cases
There is a multitude of reasons why the vast majority of lawsuit settlement are not taxed. For one, any lost wages you may be paid will automatically be taxed, based on your tax bracket, before they are ever paid out to you. Furthermore, the Income Tax Act of 1985 states that damages paid for pain and suffering will not be taxed. The same goes for ICBC Part 7 disability benefits, which are paid in cases in which someone was left disabled as the result of a car accident.