Tax,
Civil Litigation
Aug. 2, 2018
A new tax trap for personal injury cases
Only compensatory damages are tax free. Punitive damages and interest are always taxable, though this has changed radically under the Trump tax law.
Robert W. Wood
Managing Partner
Wood LLP
333 Sacramento St
San Francisco , California 94111-3601
Phone: (415) 834-0113
Fax: (415) 789-4540
Email: wood@WoodLLP.com
Univ of Chicago Law School
Wood is a tax lawyer at Wood LLP, and often advises lawyers and litigants about tax issues.
Most lawyers know that serious accident cases produce tax-free money to clients. The injuries might be from an auto accident, slip and fall, medical malpractice, industrial accident, or drug or medical device case. If the plaintiff suffers physical injuries or physical sickness, compensatory damages should be tax free.
But note the big qualifiers. This tax-free treatment only apples to compensatory damages...
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