Thursday, February 25, 2010

Pennsylvania Tax Mesothelioma Settlements

Pennsylvania has elected to charge each citizen a state income tax. These taxes do not align with the federal income tax brackets. Anyone who would like to calculate the amount they will owe on Pennsylvania state income tax can use an online PA income tax calculator. Pennsylvania has opted to tax lawsuit and settlement agreements, including mesothelioma settlements, the same way many other states are treating them when it comes to income tax declarations. The state has elected to charge people income on any lawsuit amount that is considered to be punitive damages.

This means when a victim is granted a favorable judgment or when a settlement agreement is reached, the recipient of funds will owe taxes on part of the award. This should be considered before agreeing to the particular wording of any mesothelioma settlement for asbestos exposure. A Pennsylvania lawyer who specializes in mesothelioma may have materials already written and available free of charge for anyone who requests them. A state income tax on these funds could dramatically lower the take home amount of each settlement.

Pennsylvania citizens have filed claims against the mesothelioma trust fund. The victim list is growing due to increased advertising of the availability of the funds but time and fund amounts are slipping away. Most Pennsylvania lawyers receive a payment only if the client receives a settlement from the fund. Many of these families need to know if their settlement packages will be taxed as income in Pennsylvania. A Pennsylvania mesothelioma lawyer will be the best source for specific information.
Pennsylvania State Income Tax

Fortunately, Pennsylvania has set a standard that lawsuit and settlement amounts must be taxed on the portion that is punitive only. The segments of a settlement or lawsuit that are compensatory are not taxed. Any portion used to treat the symptoms of asbestos exposure including emotional distress is also free from taxation.

The asbestos lawyers will provide specific advice; often a free consultation is provided and sometimes simple questions will be answered for free even if clients do not have a pending claim. Citizens of Pennsylvania will likely not have to pay any of lung cancer or mesothelioma settlement or lawsuit payments over to the State of Pennsylvania, if there are no extenuating circumstances.

What About Mesothelioma for Federal Income Tax?

The U.S. Internal Revenue Service (IRS) taxes only portions of the lawsuit deemed to be punitive damages. The amount taxed is based on the amount of the award that is declared as punitive. The portions of any awards or settlements that are deemed compensatory are not typically taxed under the federal tax laws. Punitive amounts must be declared for federal income tax purposes and taxes paid on some portion of the dollar amount. Most mesothelioma trust fund settlements and lawsuit awards have been recognized as compensatory funds. Ask a mesothelioma lawyer in Pennsylvania about specific conditions.

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