Hi, my name is Matt Eason. I’m a wrongful death and personal injury attorney here in Sacramento, and I’ve been practicing in that area of law for over 25 years. One of the questions that I’m regularly asked is, “Do I have to pay taxes on a wrongful death claim?”
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I’m regularly asked about the tax question, and I absolutely hate it because cause I’m not an accountant. I’m not a CPA. I’m not technically the one you should be asking. The flip side of that, though, is it’s a valid question, and the answer is usually the same.
You need to do a little research or talk to your accountant or CPA and particularly about the Internal Revenue Service rule 1-104-1. That’s rule 1-104-1. The way I interpret that rule is that if your action arises out of a personal injury lawsuit for bodily injury, including wrongful death, you do not pay taxes.
Where the rule can get a little blurry and a little gray has to do with emotional distress claims or possibly claims that are part of your personal injury or part of your wrongful death action that you previously wrote off in prior years.
For a large number of people, I think you’re going to find that no, you do not have to pay taxes, but there is some sliver of situations in which a very small portion of it might be taxable, and that’s why you really should talk to an accountant about that issue.
If you have a possible wrongful death claim and you want to talk to an attorney about that issue, I hope you’ll consider reaching out to myself or one of the other members of my firm. My name again was Matt Eason. I’m with the law firm of Eason & Tambornini.
