As you approach the date that you will receive your settlement, the Ft. Lauderdale employment law office that is handling your case may discuss different deductions that will be taken out of your check. One such deduction is for taxes. Here is how taxes affect various aspects of your case.
Your Ft. Lauderdale employment law office can explain that economic damages are those that affect your taxable income, such as back pay, front pay and benefits that you lose. These damages should be included on your tax forms as income.
Physical Injuries or Conditions
Unlike economic damages based on income, your Ft. Lauderdale employment law attorney can explain that damages related to the injuries or illness that you suffered as a result of the employment action will not be considered part of your gross income. If you have suffered physical injuries or developed an illness related to your claim, like an assault at work, the Ft. Lauderdale employment law office should ensure that this line of damages is recorded separately from lost income so that it is not taxed.
Unfortunately, federal tax law does not recognize emotional distress as a type of physical injury or illness. Therefore, any damages allotted for emotional distress are considered part of your gross income. However, if you receive damages for medical expenses related to your emotional distress, such as treatment for a stress disorder or sessions with a psychologist, these damages are not part of your gross income.
For more information on this topic, contact Mark J. Berkowitz P.A. at (954) 527-0570.