If you love being adventurous, chances are that you enjoy biking a lot on a regular basis. As it enables you to get out, you can see the world while being on the move. However, riding a motorcycle can be dangerous at times, and if you’re involved in an accident, you may want to know if this will have an impact on your taxes. Of course, there are various things you should be aware of in this situation. So, getting some of your questions answered is sure to be helpful when it comes to dealing with this unfortunate bike accident.
Question #1: Do you have to pay taxes on a personal injury settlement?
One of the ways many accidents of this type are resolved is by settling the case. This is typically done through mediation and could be a great way for you to have more peace and less stress about the entire situation.
Mediation is a process that requires you to meet with the mediator and your legal opponent to work to end the dispute. There will be a specific time for this meeting and you will want to have your motorcycle accident attorney in San Diego or wherever you live to attend the mediation to ensure you do the right things going forward.
If you’re the plaintiff in the case, you may be entitled to receiving a cash amount for your injuries. The good news for you is this money won’t be taxable.
Personal injury settlements are typically completed due to losses you have encountered, and this is money you’ve paid out of your pocket. This isn’t income you’ve earned, and this is the reason you won’t be forced to pay taxes on this amount.
Question #2: Is it possible to write-off medical expenses?
If you’ve been severely injured, it’s highly likely that you may have a lot of medical expenses that must be paid. These can range from doctor visits to physical therapy that has been recommended by your health provider.
When you fill out your taxes annually there will be a location that allows you to enter your medical costs for that year. If you meet the qualifications, this amount can usually be deducted from your total income.
Keep in mind you may need to have enough medical expenses that add up to equal a specified percentage of your gross income. If you make a lot of money, this means your costs to recover from the accident must be relatively high to receive this deduction.
This can amount to quite a tax savings for you and should certainly be included when you’re filing your taxes. If you have an accountant do this for you, be sure to have all of your medical receipts on hand.
Question #3: Will your filing status change if you’re disabled?
Being involved in a severe motorcycle crash may be devastating, and this does happen. Studies showed in 2015 there were 88,000 motorcycle accidents that year alone.
Unfortunately, some of the victims of these accidents were disabled, and this can be extremely challenging to handle. The key to getting through this time may lie in receiving some type of compensation for your injury, and it’s possible you could qualify for disability, but you will need to learn the legal process for doing so.
One of the questions that may be asked in this situation is, does your filing status have to change when you’re unable to work and are officially considered disabled? The answer is no; you will need to file either head of household, married, single or choose from the other options that are listed on your tax forms.
If you’ve been in a motorcycle accident, you may be concerned about all the ways your accident could affect you. When it comes to your annual income taxes, it’s likely you can avoid some negative consequences. The key to getting through this challenging time with the most ease and least amount of stress will rest in obtaining the right legal advice to enable you to do so.
Article Submitted By Community Writer