Are Slip And Fall Settlements Taxable In Michigan?
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In Michigan, generally, when a slip and fall settlement is intended to compensate the victim for his or her physical injuries, the settlement will not be taxable. Amounts paid for pain and suffering, medical expenses and lost wages are excluded from the IRS’s definition of “gross income.”
If you were hurt in a slip and fall and have questions about your potential settlement, including if your payout amount is taxable in Michigan, an experienced attorney who specializes exclusively in these types of premises liability cases can help you understand your legal rights and potential tax liabilities. It’s important to choose your attorney carefully as there are many personal injury lawyers who don’t specialize in these types of premises liability accidents and aren’t equipped to handle the many twists and turns in these cases. A skilled lawyer with a track record of success and a strong reputation will not only get you a maximum settlement, but can also provide a clear explanation of how taxes work when it comes to settlements.
The best lawyers for your case are at Michigan Slip & Fall Lawyers. Led by attorney Tim Holland, our legal team has a track of success for securing million-dollar settlements and verdicts for our clients. Specializing exclusively in these types of premises liability accidents, we are known for being tireless advocates for our clients, fighting to win the best possible results in the shortest time frame. We are also known for our client-focused approach.
What is the general rule about whether slip and fall settlements are taxable income in Michigan?
In Michigan, a slip and fall settlement is not considered taxable income so long as the settlement is being paid “on account of” the victim’s “personal injuries.” Damages received “on account of personal physical injuries” are not included in a person’s “gross income,” according to IRS Section 104(a)(2). (See also 26 CFR § 1.104-1)
Although Michigan’s Income Tax Act does not specifically address if slip and fall settlements are considered taxable income, it does state that “‘Gross income’ means gross income as defined in the internal revenue code.” (MCL 206.12(2))
Do I have to pay taxes on the pain and suffering portion?
In Michigan, the pain and suffering portion of a slip and fall settlement will generally not be considered taxable income so long as the pain and suffering damages are paid “on account of” of the victim’s “personal physical injuries.”
The U.S. Supreme Court has ruled that “the portion of [a] settlement intended to compensate for pain and suffering” is not taxable under IRS Section 104(a)(2) so long as it “constitutes damages ‘on account of personal injury.’” Commissioner v. Schleier, 515 U.S. 323, 329-30 (1995)
In other words, if your pain and suffering is the result of physical injuries you suffered in your slip and fall accident, then the pain and suffering portion of your settlement is not taxable.
Pain and suffering damages may include:
- Physical pain and suffering
- Mental anguish
- Fright and shock
- Denial of social pleasure and enjoyments
- Embarrassment, humiliation or mortification)
Is my recovery for medical bills and expenses taxable?
The medical bills and expenses portion of a case will generally not be taxable so long as the medical bills and expenses are paid “on account of” of the victim’s “personal physical injuries.”
The U.S. Supreme Court has ruled that “medical expenses for injuries arising out of the accident” are not taxable under IRS Section 104(a)(2) because the medical expenses “clearly constitute damages received ‘on account of personal injuries.’” Commissioner v. Schleier, 515 U.S. 323, 329-30 (1995)
In other words, if your medical expenses are the result of physical injuries you suffered in your slip and fall accident, then the medical expenses portion of your settlement is not taxable.
The only exception to the non-taxability of medical bills and expenses that are “on account of” your personal injuries from your accident is when you deducted the medical expenses in “any prior year(s) to the extent the deduction(s) provided a tax benefit,” according to the IRS’s “Settlements-Taxability.”
Do I have to pay taxes on the amount recovered for lost wages?
In Michigan, the lost wages portion of a slip and fall settlement will generally not be considered as taxable income so long as the lost wages damages are paid “on account of” of the victim’s “personal physical injuries.”
The U.S. Supreme Court has ruled that “the recovery for lost wages” is not taxable under IRS Section 104(a)(2) “as long as the lost wages resulted from time in which the taxpayer was out of work as a result of her injuries,” and, thus, the damages for lost wages are “‘on account of personal injuries.’” Commissioner v. Schleier, 515 U.S. 323, 329-30 (1995) The IRS “has consistently held that . . . lost wages . . . received on account of a personal physical injury are excludable from gross income . . .” (IRS, Tax implications of settlements and judgments)
In other words, if your lost wages are the result of physical injuries you suffered in your slip and fall accident, then the lost wages portion of your settlement is not taxable in Michigan.
Is interest on a slip and fall settlement taxable in Michigan?
In Michigan, interest on your slip and fall settlement is generally going to be considered as taxable income, according to the IRS (“Settlements-Taxability”) Under the federal tax code, “interest” is considered to be part of a person’s “gross income.” (IRS Section 61(a)(4))
Is income from a confidential settlement?
In Michigan, interest on your slip and fall settlement is generally going to be considered as taxable income, according to the IRS (“Settlements-Taxability”) Under the federal tax code, “interest” is considered to be part of a person’s “gross income.” (IRS Section 61(a)(4))
How can a lawyer help me with my case?
An experienced Michigan slip and fall lawyer who specializes in this area of litigation will not only answer all of your questions on whether your potential settlement will be considered as taxable income, but will also help you ensure that you receive a payout amount that reflects the full value of your case! Hiring an attorney who focuses his or her practice on slip and fall accidents is ultimately the best thing you can do to get the compensation you deserve.
Your attorney will conduct a thorough investigation, gather and preserve crucial evidence, establish liability, build your case, and negotiate a maximum settlement. The more respected your attorney is among the insurance companies, the more likely you are to receive a significant recovery. The insurance industry’s own data indicates that victims who hire the most qualified lawyers tend to receive much larger settlements and resolve their cases significantly faster than those who don’t.
Attorney Tim Holland, is arguably Michigan’s most successful and experienced slip and fall lawyer. He has successfully handled over 200 injury cases in this area of law, and has a track record of securing million-dollar settlements and verdicts. In addition, his clients consistently praise his client-focused approach, care and compassion.
Examples of our settlements
Here are some examples of our recent recoveries for clients we have represented:
- $7 Million – For a client who was seriously hurt in a construction accident caused by worksite safety violations
- $5.5 Million – For a client who was seriously injured by a dangerous condition on someone’s property
- $4.6 Million – For a client who suffered a traumatic brain injury caused by a national retail pharmacy’s negligent display, maintenance and securing of dangerous merchandise
- $3.6 Million – For a client who was seriously hurt by a dangerous condition on someone’s property
- $2.5 Million – For a client who was seriously injured by a hidden dangerous condition on someone’s property
Need help with your slip and fall settlement and have questions about taxability of the amount awarded? Call our attorneys now for a free consultation!
If you are injured in a slip and fall accident in Michigan and you have questions about your settlement including if the amount awarded will be considered as taxable income, call now and let attorneyTim Holland and the skilled team at our law firm provide the support you need. With a proven track record of securing top settlements for victims, we’ll give you the peace of mind you deserve while working to get you the compensation needed to help rebuild your life.
We pride ourselves on offering every client personalized care, compassion and respect. Clear communication is a cornerstone of our practice, and we promise to always be available for you. You can count on us to return your calls, respond to your emails, and answer any questions you may have.
To speak with an experienced attorney about your case, call us today or fill out our contact form for a free, no-obligation consultation. We’ll guide you through the laws and help you understand your options. There’s absolutely no cost or obligation. We’re here to support you every step of the way.
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Get help from our Michigan slip and fall lawyers today
You do not have to go it alone after your slip and fall accident. Let the experience attorney Tim Holland and the lawyers at Michigan Slip and fall have on slip and fall cases along with their track record of getting the highest settlement amounts possible for their victims give you peace of mind, while they help to pick you back up and get you the compensation that you need and deserve to start rebuilding your life.
We pride ourselves on treating every client with care, compassion, and respect. We pride ourselves on communication and we will always be there when you need us. We will ALWAYS return your calls and emails and answer your questions.
To speak with an experienced slip and fall accident attorney about your injury, call us now, or fill out our contact form for a free consultation.
We will help you understand Michigan’s slip and fall law and answer all of your questions about how we can make the law work for you. There is absolutely no cost or obligation. We’re here for you now.
Meet Our Attorney
Tim Holland is arguably Michigan’s most experienced and successful slip and fall lawyer. You can read more about Tim Holland’s experience and success here.
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