Hello, about 5 months ago my Girlfriend Got hit by a car and she was hurt pretty bad and had to be on a Walker for quite a while. I really dont know what happened but she told me that it ended up being her fault but she said she was going to recieve money. today she called me and said they recieved 54000 dollars but her mom talk to the lawyer and said if she starts working and she is 17 that the government will take money from her something like that i think because once you start working you pay taxes and the 54k also gets deducted by taxes. she wants to get a job because she is a senior in highschool and she needs to save up money for prom and other things for the last semester of school and she cant use the 54k until she turns 18 and her birthday is after high school ends. please help.
There is no income tax obligation associated with a personal injury settlement.
Personal Injury Lawyer
I read your question, and you are involving yourself in something which has always been a pet peeve of mine. You are supposedly telling the members of this forum what the lawyer told your girlfriend's mother, who then told your girlfriend, who then told you. You are asking for an opinion. I assume you are then going to tell your girlfriend, who will tell her mother, who will tell the lawyer. This is like playing "whisper down the lane," and there are too many chances to screw up.
If your girlfriend doesn't understand what is going on, since she is a minor, let her and her mother meet or speak with the lawyer and get an explanation. The lawyer knows the facts and he is in the best position to give an opinion. If for some reason they do not trust that lawyers opinion, then they can get a second opinion
Personal Injury Lawyer
I agree with Chris; personal injury settlements are not subject to income tax obligations.
Attorney Fadi Chakour, M.D., J.D. My consultation is free. Call me on my cell phone (904)612-0586.
Only the 'lost wages' portion of a settlement is taxable.
Only 29% Contingency Fee! Phone: 215-510-6755 www.InjuryLawyerPhiladelphia.com
Under current IRS regulations, a personal injury settlement is not subject to taxation. Money received for a minor must be placed in a guardianship of the property account overseen by the Probate Court.
I suggest that your friend speak directly with her attorney and get straight answers. She should make sure that her recovery is fully protected until she turns 18. It would also be beneficial for your friend to speak with a CPA about how she could best invest her recovery and maximize its return in the future and minimize tax consequences on the future interest earnings.
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Mr. Lundeen is licensed to practice law in Florida and Vermont. The response herein is not legal advice and does not create an attorney/client relationship. The response is in the form of legal education and is intended to provide general information about the matter within the question. Oftentimes the question does not include significant and important facts and timelines that, if known, could significantly change the reply and make it unsuitable. Mr. Lundeen strongly advises the questioner to confer with an attorney in your state in order to ensure proper advice is received.
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