Personal Injury and Taxation

In today's world, wherever you turn you may run into a tax - income tax, property tax, sales tax, gas tax…… and the list goes on. A question that needs to be answered for our personal injury clients is whether Uncle Sam wants his cut! Like many "law answers" -- it depends.

The good news is most of our clients do not pay income tax on their personal injury award. The reason is that most clients DO NOT take any of the health care costs as itemized deductions. If you did take a deduction for health care costs, then you need to complete line 21 of Form 1040 and report that portion of the award as income.

Any amount of the award that is attributed emotional distress is not taxable. I guess the IRS knows taxes alone give people distress so they stay away from this type of personal injury award.

What is taxed is the money you recover for lost wages or lost profits. Thus, you need to report recovery for lost wages on line 7 of Form 1040.

Whether you recover punitive damages is dependent upon the state you reside in. For example, Nebraska does not allow punitive damages. In states that allow punitive damages, the federal government will likely tax some of your money. Punitive damages would be reported to the IRS on line 21 of Form 1040.

Does a mask mandate violate constitutional rights?

When you step into your car, you put a seat belt on. If you don’t, you might get a ticket, or even worse, die. Governmental and social constructs create boundaries for our safety. So, why is there an explosion of an anti-mask movement that believes being forced to wear a mask is a violation of […]

Assault By Ex-Teacher: OPS Board to consider $625,000 settlement

Omaha World Herald, June 15, 2020 Assault By Ex-Teacher OPS Board to consider $625,000 settlement District’s insurance carrier would pay family of one of at least 6 students molested at Fontenelle Elementary The board of the Omaha Public Schools is set Monday to consider a $625,000 settlement with the family of a student assaulted by […]

Bend the Knee

Due to the popular show Game of Thrones, the term “bend the knee” has made its way into public conversations. In the HBO show, the term is basically a submission and a pledge of loyalty to a king or queen. In the real world, the term “bend the knee” has also taken on new significance over the last year. Even if you are not a football fan you probably heard about professional football players kneeling during the National Anthem, which is played before a game is started.