Paying Taxes and Declaring Bankruptcy: How Much Money Will I Lose?

After you make a successful workers’ compensation or personal injury claim, you might have a large chunk of money coming to you. Lots of our clients ask whether or not they have to pay taxes on these awards, or whether bankruptcy will affect their compensation. We’ve laid it all out for you below. Check it out!

Do I have to pay taxes on my personal injury settlement?

According to IRS regulation 1.104-1, your personal injury settlement is tax-free. In fact, there’s not even a place on your tax return to put that compensation. So the answer is no. You do not have to pay taxes on your personal injury settlement.

Do I have to pay taxes on my workers’ compensation settlement?

According to IRS regulation 1.104-1, your workers’ compensation settlement is tax-free. In fact, there’s not even a place on your tax return for that compensation to go, so the answer is no, you do not have to pay taxes on your workers’ compensation settlement.

Will my personal injury settlement be taken if I file bankruptcy?

If you have a personal injury case pending and you’re thinking about filing bankruptcy, you should know that your personal injury settlement could be at risk in a bankruptcy proceeding.

There are two different kinds of bankruptcy. If you file a chapter 13 and your plan is less than 100% repayment, then the chapter 13 trustee could look to your proceeds. Also in a chapter 13, your personal injury settlement could be exempt.

If you have a chapter 7, which is a liquidation bankruptcy, the chapter 7 trustee will likely look to your proceeds to pay some of your creditors. You should make sure to tell your personal injury lawyer that you’re contemplating or have filed a bankruptcy proceeding so that he can work with your bankruptcy lawyer to adequately protect your interests.

If you’ve been hurt at work, call Rocky McElhaney Law Firm at 615-425-2500 or reach out at RockyLawFirm.com. We have offices in Nashville, Hendersonville and Knoxville, and fight on behalf of the injured throughout Tennessee. Contact us today to learn how we can help you.

 

 

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"We could never begin to thank you for all of your help. We always refer folks to you and will continue as you are, “The Man!” We treasure your friendship and are so proud to say that Rocky McElhaney is our lawyer!"

Bobby and Beck P.

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Bobby and Beck P.

"We could never begin to thank you for all of your help. We always refer folks to you and will continue as you are, “The Man!” We treasure your friendship and are so proud to say that Rocky McElhaney is our lawyer!"

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"5 stars! This is the greatest Law firm I have ever seen. They make you feel like you are being taken care of and you are not just a number, but a name. They are very concerned with your every need. Rocky we love your LAW FIRM!!"

Mary T.

Rocky McElhaney Law Firm
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2015-02-06T16:39:44+00:00

Mary T.

"5 stars! This is the greatest Law firm I have ever seen. They make you feel like you are being taken care of and you are not just a number, but a name. They are very concerned with your every need. Rocky we love your LAW FIRM!!"

“You and your staff again are amazing…”

"As much as I love all the "thank you's" my friend is giving me for recommending you, I of course cannot take all the credit. You and your staff again are amazing and when I can, I wil refer you always. My friend is overwhelmed (her exact words) for how well you took care of her and her daughter."

Kerry W.

Rocky McElhaney Law Firm
5.0
2015-02-06T15:32:17+00:00

Kerry W.

"As much as I love all the "thank you's" my friend is giving me for recommending you, I of course cannot take all the credit. You and your staff again are amazing and when I can, I wil refer you always. My friend is overwhelmed (her exact words) for how well you took care of her and her daughter."

“I would like to express my sincere gratitude…”

"5 stars! I would like to express my sincere gratitude to you and all the attorneys who handled my case from The Rocky McElhaney Law Firm for your excellent representation in my case. Words cannot express my heartfelt thanks for your outstanding professionalism, expertise, and legal consultation."

Eddie H.

Rocky McElhaney Law Firm
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2015-02-06T16:39:03+00:00

Eddie H.

"5 stars! I would like to express my sincere gratitude to you and all the attorneys who handled my case from The Rocky McElhaney Law Firm for your excellent representation in my case. Words cannot express my heartfelt thanks for your outstanding professionalism, expertise, and legal consultation."

“Rocky McElhaney Law Firm went above and beyond the call of duty “

"5 stars! To whom it may concern: Rocky McElhaney Law Firm went above and beyond the call of duty when it came to handling my case. Rocky McElhaney and Russell Belk were there for me 100% of the way."

Linda S.

Rocky McElhaney Law Firm
5.0
2015-02-06T15:34:24+00:00

Linda S.

"5 stars! To whom it may concern: Rocky McElhaney Law Firm went above and beyond the call of duty when it came to handling my case. Rocky McElhaney and Russell Belk were there for me 100% of the way."

“Rocky McElhaney Law firm is filled with great people…”

"5 stars! If you’re looking for a team of great attorney’s, then you’ve reached the ones and no longer need to search. Rocky McElhaney Law firm is filled with great people that are empathetic, and will fight for you like they are fighting for themselves! Call them up and see for yourselves!"

Phillip H.

Rocky McElhaney Law Firm
5.0
2015-02-06T16:37:49+00:00

Phillip H.

"5 stars! If you’re looking for a team of great attorney’s, then you’ve reached the ones and no longer need to search. Rocky McElhaney Law firm is filled with great people that are empathetic, and will fight for you like they are fighting for themselves! Call them up and see for yourselves!"
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