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Paying Taxes on a Birth Injury Settlement

The amount of income tax that must be paid on any personal injury settlement you receive for your child’s injuries in Hawaii will depend on the specific earnings that make up your compensation. A Hawaii personal injury settlement will include a breakdown of earnings, some of which are and aren’t taxable.

Income Tax on a Birth Injury Claim

The income tax on a Hawaii child injury claim will depend on the earnings included in your settlement, according to a 1996 ruling from the Internal Revenue Service (IRS). Certain earnings on a Hawaii personal injury settlement, such as punitive damages and emotional distress, must be reported. These are generally taxable.

Typically, physical injury and physical sickness earnings are tax free. However since tax income can be a complex portion of your Hawaii child injury claim, it is best to speak with a tax attorney or an accountant. They understand what must and must not be declared in a Hawaii personal injury settlement. Because tax codes can change from year to year, it is in your best interests to seek the help of a tax professional when filing your taxes that include an injury settlement of any sort.

How an Attorney Can Help

If your child has been injured and you wish to file a Hawaii child injury claim a Honolulu personal injury attorney can talk to you about your options for legal recourse. An experienced attorney can determine whether someone else’s negligence led to your child’s injuries and can collect the necessary evidence to put together a solid case. They can also speak with the insurance companies involved in your case and take care of the paperwork, while you focus on helping your child to recover.


Learn About Your Legal Options

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