Under tax laws established by the Internal Revenue Service (IRS), you will probably not have to pay taxes on a Jones Act settlement. The IRS typically does consider the money you receive for a personal injury as income, so the agency does not tax this money.
A New Orleans Jones Act lawyer can provide you with more information about your specific tax situation. An attorney can also make sure that your settlement includes the proper wording to protect you from a tax burden on your compensation.
Do You Owe Federal Taxes for a Jones Act Settlement?
Federal laws about the tax implications of settlements and judgments mean that you will most likely not own taxes on your Jones Act settlement. The IRS should not tax you for damages you receive to cover a personal injury or physical sickness.
Note that, typically, you are only exempt from paying taxes on the money you receive to cover losses associated with an injury. Therefore, you may face taxes on some portions of your Jones Act settlement.
A New Orleans maritime injury lawyer can review your situation and explain the logistics of the tax system for your settlement. Your attorney can also answer questions like, “Will I owe taxes on my Jones Act settlement?”
Will the State Tax Your Jones Act Settlement?
Louisiana typically follows the same tax rules as the federal government. You should not face state taxes for your Jones Act settlement in most cases. You can confirm your tax liability with your lawyer.
What Compensation do You Get Through a Jones Act Settlement?
If you qualify for compensation under the Jones Act, you may receive money to pay for your:
Medical Expenses
You may sustain catastrophic injuries when working as a seaman, including cuts, burns, and the effects of near drowning. A lawyer can help you file a claim to secure the funds to cover your:
- Emergency medical treatment
- Transportation to a medical facility
- Medical tests and procedures
- Physical therapy and medications
You should keep records of all your healthcare expenses to include them in your Jones Act claim.
Lost Pay
You may need a lot of time off work to recover from an accident on a ship, boat, or another vessel. Your settlement may cover your lost wages and diminished earning potential based on the specifics of your case.
Pain and Suffering
Finally, you may qualify for money to cover the mental suffering and emotional pain you experience as a result of your injuries.
Will you owe taxes on your Jones Act settlement for these non-economic damages? If the pain and suffering you experience comes from your injuries, the government should not tax this part of your settlement.
However, you may face taxes for this part of your Jones Act settlement, depending on the wording of the legal documents. You should confer with your lawyer to review the settlement and assess its tax implications.
Have a Lawyer Review Your Jones Act Settlement
Generally, you should not owe taxes on a Jones Act settlement. However, the wording used in your settlement can influence your tax liability. It’s crucial that you have your lawyer go over all settlement documents.
All applicable paperwork should make it clear that your settlement money falls under Section 104 of the government’s Internal Revenue Code. Clearly written documents will protect you from confusion when tax time rolls around.
You can share the information with the professional handling your taxes. Having the correct paperwork can help you avoid paying taxes on your Jones Act settlement and may allow you to prevent future audits from the IRS.
How do You Get a Jones Act Settlement?
You may get a Jones Act settlement if you sustain injuries while working as a seaman. Your lawyer may help you settle by showing that your employer’s negligence caused your injuries and financial losses.
An attorney can go over the basics of the Jones Act for offshore injured workers and help you determine if you qualify for compensation. It’s essential that you get help quickly if you want to file a claim for compensation.
You should also:
- Seek medical care for all of your injuries
- Take pictures of the injuries you sustained
- Get contact information from people who saw the accident, including your coworkers
- Write down exactly what happened
Taking these steps can strengthen your claim and help you secure compensation after an accident. You can learn more by contacting a lawyer for help.
Talk to Us About Your Jones Act Settlement
Will you owe taxes on your Jones Act settlement? Generally, you don’t have to pay federal or state taxes on the money you receive through a Jones Act settlement. You can learn more about these settlements and tax liability with our team at Scott Vicknair Law.
We have over three decades of combined experience and can put you first after an accident. You can call or complete our online contact form to learn more.
