Of course, your attorney must pay taxes. I'm curious why you would even know this.
Personal injury cases only; I'm good at it; you be the Judge! All information provided is for informational and educational purposes only. No attorney client relationship has been formed or should be inferred. Please speak with a local and qualified attorney. I truly wish you and those close to you all the best. Jeff www.nyelderinjurylaw.com
Yes, it is common. The insurance company will 1099 the attorney so the attorney will pay taxes on his or her portion (fees) as income.
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The insurance company must obtain the attorney's Tax ID number to report the payment to the IRS - they have no choice to do otherwise. That does not mean that the money you receive from your attorney's trust account will be reported to the IRs - typically it is not in a personal injury case. However, some of your recovery might be taxable - you should consult a tax adviser or attorney about that.
Carriers are required to get that information because they have to issue a 1099 tax form to your attorney for the gross amount that is tendered to him/her for the settlement of your claim. It has no bearing on the amount you should be getting, except that, time wise, the carrier will not likely issue the settlement check until they have that information. Speak with your attorney.
Yes. This is common practice for the attorney to provide a tax ID # for issuance of payment from an insurance carrier following an accident settlement.
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Yes, it is common practice for the insurance company to ask for the law firm's tax id. The law firm will typically recieve a 1099 at the end of the year and the law firm will be obligated to pay taxes. The settlement draft should include both the client's name and the law firm's name. The check is then endorsed by the client and law firm and deposited in the law firm's attorney client trust account. The attorney will then pay the law firm, the client and any outstanding medical liens.
This is typical. The insurance company needs to report for IRS purposes.
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Federal law requires the insurance company to send the 1099 to the attorney for the full amount of the settlement.
The settlement check is nearly always payable jointly to the client and the attorney. The attorney deposits the check into his/her trust account and disburses the funds from that account. If your attorney is not responsive or doesn't pay you your share, contact the State Bar.
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