Are Wrongful Death Settlements Taxable in California?

Published by

Samer Habbas, Esq

A wrongful death is the loss of life that is caused by the negligent or reckless actions of another individual. Although you may be entitled to monetary compensation for the wrongful death of a loved one, you need to be aware that your settlement or judgment or portions thereof may have certain tax implications.

For more information about the tax implications of your wrongful death settlement, it is in your best interest to consult with an Irvine wrongful death lawyer.

Labeling the Settlement Makes a Difference

The IRS draws a line between compensatory and punitive damages when it comes to the taxation of personal injury settlements, including monetary settlements for wrongful death claims.

Compensatory damages are intended to compensation you for your loss and allow you to return to your life as it used to be prior to the wrongful death of a loved one. The IRS will not take a share of the compensatory portion of your wrongful death settlement or judgment awards. However, one exception to this rule is that compensatory damages for emotional distress and mental anguish may be taxable for the amount exceeding the medical costs that were not deducted.

Punitive damages, on the other hand, are a different matter where the IRS is concerned. These types of damages are generally awarded when your loved one’s death was particularly outrageous or egregious. In other words, punitive damages are generally awarded as a form of punishment and the IRS wants a share in the proceeds.

Since California tax laws frequently change, you should consult with an Irvine wrongful death lawyer in order to determine whether your wrongful death monetary settlement or judgment or portions thereof is subject taxation.

Call Us Before It’s Too Late!

For more information about the tax implications on wrongful death monetary compensation, call the Law Offices of Samer Habbas at 888-848-5084 to schedule a complimentary consultation with one of our experienced Irvine wrongful death lawyers.

Samer Habbas, Esq

Samer Habbas is a California attorney with over 18 years of experience in personal injury law. Throughout his career, he has successfully recovered over $300 million for his clients, solidifying his reputation as a leading advocate in the field. Samer swiftly gained recognition for his adept negotiation skills and unwavering dedication to his clients. His practice spans a wide range of personal injury cases, including car accidents, dog bites, funeral home abuse, premises liability, and wrongful death. Samer is known for his compassionate approach and commitment to securing favorable outcomes for his clients. His expertise has earned him the trust and respect of both his clients and his peers within the legal community. He is also deeply invested in giving back to his community. He actively participates in pro bono work and volunteers his time to various charitable organizations. Samer is a champion for those who have been wronged, leveraging his extensive experience and expertise to make a meaningful difference in the lives of his clients and his community.