Asbestos exposure can lead to a rare and deadly form of cancer called mesothelioma. The costs of treating mesothelioma can be astronomical, and can cause significant financial, emotional and psychological harm to victims, their family members and loved ones.
Fortunately, victims can seek compensation through mesothelioma settlements or verdicts. These settlements can help victims pay for their medical bills, lost wages, and other related expenses. However, many people wonder whether these settlements are taxable or not. This article delves into every aspect of mesothelioma settlements and whether they are taxable or not.
The Basics of Mesothelioma Settlements: What Are They?
A mesothelioma settlement is a legal agreement between a victim of mesothelioma and one or more defendant companies. A mesothelioma settlement typically comes about after a lawsuit or legal action taken against asbestos-related companies over exposure and subsequent diagnosis of the cancer. This agreement stipulates that the defendant will pay a certain sum of money to the victim in exchange for dismissing the lawsuit.
In most cases, mesothelioma settlements are reached outside of court, but if necessary, legal action can be taken. Mesothelioma settlement amounts may vary depending on a few factors such as the extent of the disease, the amount of time the victim worked at the asbestos-related company, and the level of negligence exhibited by the company.
What is Mesothelioma?
Mesothelioma is a rare and aggressive form of cancer that typically affects the lining of the lungs, abdomen, or heart. It is caused by asbestos exposure, which can result from inhaling or ingesting tiny asbestos fibers. Mesothelioma can take decades to develop after initial exposure, and by the time it is diagnosed, it often has reached an advanced stage.
What Are the Symptoms of Mesothelioma?
The symptoms of mesothelioma may vary depending on the location of the tumor. Some of the most common symptoms include:
| Location | Common Symptoms |
|---|---|
| Lungs | Chest pain, coughing, shortness of breath, fatigue, weight loss |
| Abdomen | Abdominal pain, swelling, nausea, vomiting, weight loss |
| Heart | Chest pain, heart palpitations, fatigue, shortness of breath |
Are Mesothelioma Settlements Taxable?
The IRS (Internal Revenue Service) considers mesothelioma settlements as compensation for physical injuries or illnesses, and compensation for damages that occurred as a result. Therefore, the IRS does not see mesothelioma settlements as taxable income.
Taxable vs Non-Taxable
The IRS makes a clear distinction between taxable and non-taxable income. Taxable income is any money or compensation that an individual receives and must pay taxes on. Non-taxable income is compensation that one does not pay taxes on. The IRS categorizes mesothelioma settlements as non-taxable income.
Exceptions to the Rule
There are, however, exceptions to the rule where mesothelioma settlements may be taxable. The IRS has determined that if the mesothelioma settlement includes justification beyond damages for physical harm, these other components may be considered taxable. For example, any amounts designated as non-economic damages (such as pain and suffering) may be taxable. It is also essential to note that punitive damages (intended to punish the guilty party) are entirely taxable.
Structuring a Mesothelioma Settlement to Minimize Taxable Income
It is important to structure the mesothelioma settlement’s components to minimize any tax obligations. An experienced mesothelioma lawyer can help victims make this distinction clearly when negotiating the settlement with the defendant. It is important to ensure that the settlement agreement reflects the compensation’s nature and tax-exempt classification to avoid any tax-related penalties or issues.
How to Report a Mesothelioma Settlement on Your Taxes
If you are uncertain about how to report a mesothelioma settlement on your taxes or whether you need to report it at all, it is always best to seek advice from a tax professional. Although mesothelioma settlements are generally tax-free, they are still compensation that needs to be reported accurately on your return.
Frequently Asked Questions
What Is a Mesothelioma Trust Fund?
A mesothelioma trust fund is money set aside by a bankrupt company for the victims of their asbestos exposure.
Can Mesothelioma Victims File For Workers’ Compensation?
Yes, mesothelioma victims can file for workers’ compensation. However, they may also be eligible for other forms of compensation such as social security disability, VA benefits, or lawsuit settlements.
What Is The Average Mesothelioma Settlement?
The average mesothelioma settlement amount may vary depending on the particulars of each case. Typically, the average settlement ranges from $1 to $1.4 million.
What Is The Statute Of Limitations For Filing A Mesothelioma Lawsuit?
The Statute of limitations to file a mesothelioma lawsuit may vary from state to state. It is essential to speak to an experienced mesothelioma attorney to learn about the Statute of limitations and other relevant laws in your state.
Can Family Members File A Mesothelioma Claim?
Yes, family members of a deceased mesothelioma victim may file a wrongful death lawsuit to seek compensation for their lost loved one.
How Long Does It Take To Receive A Mesothelioma Settlement?
The time it takes to receive a mesothelioma settlement varies depending on the case’s specifics. However, the average time for a mesothelioma case to resolve is about one year for settlements and two years for trial verdicts.
Can I Receive A Mesothelioma Settlement Without A Lawsuit?
Yes, it is possible to receive a mesothelioma settlement without a lawsuit. Some cases are settled outside of court, and some companies may offer compensation to avoid litigation.
What If I Already Received a Mesothelioma Settlement Offer? Can I Still Hire an Attorney?
Yes, you can still hire an attorney even if you received a settlement offer. An experienced mesothelioma attorney can help you determine whether the settlement offer is fair and whether there is room for negotiation.
What Is an Offer in Compromise?
An offer in compromise is a way to settle tax debts for less than the full amount owed. In some cases, the IRS may accept an offer in compromise as partial payment for the tax liability of a mesothelioma victim.
Can I Deduct Legal Fees and Other Costs Related to My Mesothelioma Lawsuit?
Legal fees and other costs related to a mesothelioma lawsuit may be tax-deductible if they are considered ordinary and necessary business expenses. It is best to consult with a tax professional to determine the deductibility of these expenses.
Can I Receive Social Security Benefits and Mesothelioma Settlements at the Same Time?
Yes, it is possible to receive Social Security benefits and mesothelioma settlements simultaneously. However, the specifics of each case may differ, and it is always best to speak to an experienced attorney to determine how to maximize compensation benefits.
Can I Receive VA Benefits and Mesothelioma Settlements at the Same Time?
Yes, it is possible to receive VA benefits and mesothelioma settlements simultaneously. However, the specifics of each case may differ, and it is always best to speak to an experienced attorney to determine how to maximize compensation benefits.
Can I Receive Both Workers’ Compensation and Mesothelioma Settlements at the Same Time?
Yes, it is possible to receive both workers’ compensation and mesothelioma settlements simultaneously. However, the specifics of each case may differ, and it is always best to speak to an experienced attorney to determine how to maximize compensation benefits.
What Happens if I Don’t Report My Mesothelioma Settlement on My Taxes?
If you do not report your mesothelioma settlement on your taxes, you may face penalties and interest charges. It is essential to report your settlement accurately so that you don’t incur any tax-related issues.
How Will I Know If My Mesothelioma Settlement Is Taxable?
If you are uncertain about whether your mesothelioma settlement is taxable or non-taxable, it is best to speak to an experienced attorney or tax professional.
The Bottom Line
Mesothelioma settlements can offer financial relief to victims and their families, as well as provide a sense of justice. The good news is that these settlements are generally tax-free, thanks to their classification as compensation for injuries or illnesses. However, it is important to structure the settlement’s components accurately to minimize tax obligations and avoid any penalties.
Take Action Now!
If you or a loved one has been diagnosed with mesothelioma, it is essential to seek legal counsel from an experienced mesothelioma attorney who can help you navigate the legal process and ensure that you receive the compensation you deserve. Don’t wait until it’s too late. Contact us today to schedule a free consultation.
Disclaimer
The information contained in this article should not be construed as legal advice. It is for informational purposes only. You should consult with an experienced attorney to determine your legal rights and options.
