Taxation And Damages

A.

Tax Free Damages for personal injuries are tax free, regardless of whether damages are awarded by a court judgment or received as part of a private settlement. Courts are split on the issue of whether a defendant is allowed to tell the jury that damages are tax free.

B.

Calculation of Damages and Taxation

1.
Past Earnings Calculations for lost past earnings are based on the plaintiff’s net earnings.

2.
Future Earnings Lost future earnings are calculated according to the plaintiff’s tax bracket.

a.
Ordinary Taxpayer